Karnataka government seeks solutions for 12000 crore revenue shortfall

Karnataka is facing a significant revenue shortfall of Rs 12,000 crore, leading the state government to explore internal funding sources to reduce reliance on new borrowing.

With Rs 90,000 crore allocated for welfare initiatives, including the popular Anna Bhagya scheme, officials are evaluating the sustainability of current subsidies and guarantee programs, which are contributing to rising expenses.

To address the financial strain, the Karnataka government is considering the establishment of an investment trust (InvIT) and plans to issue bonds to raise capital.

This strategy aims to alleviate the financial burden of high-interest borrowing from institutional investors.

The proposal, developed with insights from the Boston Consulting Group, aims to tackle the increasing costs associated with five guarantee schemes introduced under Chief Minister Siddaramaiah's administration.

Despite being one of the more financially stable states in India, Karnataka has experienced a decline in revenue since the implementation of the GST regime, resulting in a reduced share of central revenues.

As a result, the state has had to increase borrowing to support its welfare and development projects.

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