Karnataka to drop old schemes to fund projects Congress promised in manifesto

The Congress government in Karnataka is set to drop several existing schemes and increase borrowings to help fund the near ₹55,000-crore worth five poll guarantees of the party, people aware of the matter said.

The state is hoping to mop up more than ₹8,000 crore through consolidation of schemes and raise funds by borrowing up to 3% of its gross state domestic product (GSDP), they said.

"The government will make its best effort to ensure that the guarantees are funded through increase in revenue and consolidation of schemes," a state government insider told ET. "The expenditure incurred for them will also be offset by borrowings so as not to significantly affect the capital expenditure. We will, in fact, look to increase borrowing to fund capital expenditure."

The changes will be announced in the new Siddaramaiah government's first budget presentation on July 7.

Government estimates indicate that ₹8,000-9,000 crore can be mopped up by dropping and merging some of the old schemes, especially those announced in the previous BJP government's February budget, ET has gathered.

The S R Bommai government had announced electricity connections to 2.35 lakh unelectrified houses, free education in government colleges for nearly eight lakh students, free coaching for 10,000 SC/ST students, and additional subsidy for farmers among other schemes.


The Congress government has already drawn up a list of schemes to be dropped, streamlined and consolidated, ET has learnt. Schemes with similar objectives will also be merged to cut costs.

That apart, the state is considering raising borrowing to nearly 3% of GSDP. Karnataka has a robust near ₹25.5 lakh-crore GSDP and an increased borrowing will allow it considerable latitude to help fund capital expenditure, it is felt.

However, footing the bill for the five poll guarantees is still bound to test the government as it gets them on the launchpad. It is estimated that the five poll guarantees will cost the government nearly ₹50,000-₹55,000 crore per annum.

The biggest outgo will be the Grihlaxmi cash assistance scheme - a 2,000 monthly assistance to the woman head of every family - which is expected to run up a bill ranging between ₹25,000 crore to ₹30,000 crore a year.

The Grah Jyoti - to offer 200 units of free power to all households - will need another ₹10,000-14,000 crore, ET gathers.