Bengaluru (Karnataka) [India], September 25 (ANI): Karnataka Deputy Chief Minister and Revenue Minister G Parameshwara on Thursday rejected the Opposition's allegation that the state government is bankrupt, saying that advice issued by the Finance Department to maintain fiscal discipline should not be interpreted as an indication that the government has no funds.
Replying on behalf of the government during a discussion on the drought situation in the Legislative Assembly, Parameshwara said it was the responsibility of the Finance Department to caution the government against excessive expenditure and ensure that spending remains within the limits approved in the Budget and Finance Bill.
"The Finance Department issues such warnings and advice irrespective of which Government is in power," he said.
Explaining the department's role, Parameshwara said that if expenditure beyond the allocation approved in the Budget is proposed, the department would naturally ask where the additional funds would come from. He added that any additional expenditure would require a supplementary Budget and approval from the Legislature.
"This is the minimum financial prudence expected of any Government," he said.
Parameshwara said the Finance Department had advised caution regarding a proposed scheme requiring Rs 1,000 crore over the financial years 2026-27 and 2027-28. He said the department's advice was based on concerns that launching a scheme without a budget allocation or earmarked funds could create difficulties in cash-flow management.
"This is financial advice. It is not a statement that the Government has no money," he said.
According to figures cited by Parameshwara, Karnataka's fiscal deficit for 2026-27 stands at 2.95 per cent, against the 3 per cent limit under the Fiscal Responsibility and Budget Management (FRBM) framework. The state's revenue deficit is Rs 22,957 crore, while total liabilities stand at 24.94 per cent of Gross State Domestic Product (GSDP), close to the prescribed 25 per cent level.
The Finance Department's caution comes amid reports highlighting fiscal pressure in Karnataka, including a revenue deficit, existing financial commitments and limited room for additional borrowing. The department has also advised restraint in taking up new projects without identifying resources or reallocating approved funds.
Parameshwara said that similar advisories had been issued during previous governments, including those led by Bharatiya Janata Party leaders B S Yediyurappa and Basavaraj Bommai.
Referring to the Bommai government, he said the Finance Department had cautioned in February 2022 that rising committed expenditure and limited revenue options could affect the presentation of a revenue-surplus Budget. He also referred to an advisory issued in February 2023 regarding the implementation of the Seventh Pay Commission, which had warned of possible pressure on FRBM limits and additional borrowing.
"That advice was given during the BJP Government headed by Basavaraj Bommai. Can we therefore say that the Government was bankrupt? Such advice is part of the Finance Department's normal functioning," he said.
He also cited an advisory issued during the Yediyurappa government in January 2020, when the state's own revenue collections had reportedly fallen to around 70 per cent of the target.
Parameshwara said the Finance Department's responsibility was to bring potential financial risks to the government's attention and ensure that expenditure remained within prescribed limits.
Rejecting the Opposition's interpretation of the advisory, he said that financial caution should not be equated with bankruptcy and maintained that such guidance was a routine part of fiscal management. (ANI)
Finance Department advice does not mean Karnataka is bankrupt, says Deputy CM G Parameshwara
