The revenue deficit in the Budget presented by Chief Minister Siddaramaiah on Friday, which is due to the implementation of the five guarantee schemes of the Congress, is unlikely to come down at least till 2026-2027.
The revenue deficit has increased from ₹ 12,523 crore in 2023-2024 (when the government estimated to spend ₹ 36,000 crore on guarantees) to ₹ 27,254 crore in 2024-2025 with the government allocating ₹ 52,000 crore. This is likely to up further. The revenue deficit that was 0.49 % of the GSDP in 2023-24 will increase to 0.97 % in 2024-2025. In 2022-2023, the State had a revenue surplus budget due to the ₹20,000 crore released by the Centre as GST compensation.
“We do not expect the revenue deficit to come down at least till 2026-2027. Barring Gruha Jyothi, which is expected to increase by about 8 % to 10 %, the cost incurred on other guarantees of Gruha Lakshmi, Anna Bhagya and Shakti, is expected to remain stable. On the other hand, we expect resource mobilisation to increase by 10 % to 12 % annually. This would mean, the revenue deficit will remain for at least next two financial years,” a Revenue Department official said.
Dipping into SCSP/STP
Chief Minister Siddaramaiah also acknowledged that the government will dip into the SCSP/TSP funds meant for Scheduled Castes and Scheduled Tribes welfare to fund the guarantee schemes like last year, since they also benefit from guarantees, and that it would be proportionate to the population.
With State government raising the issue of “injustice” in tax devolution from the Centre and pressure of implementing the guarantees within the available resources, the government has increased the borrowing to ₹ 1.05 lakh crore in 2024-2025, up from ₹ 85,818 crore in 2023-2024, taking the total outstanding liabilities of the State to ₹ 6.65 lakh crore. The fiscal deficit is pegged at ₹ 82,981 crore or 2.95 % of the GSDP in 2024-2025 compared to ₹ 66,646 crore or 2.60 % of the GSDP in 2023-2024.
The net result has been that the capital expenditure outlay at ₹ 52,902 crore has seen a marginal increase by 3 % while the Budget outlay has increased by 13 %. A senior government official acknowledged that the capital expenditure was under stress as the general services, including debt servicing and salaries/ pensions account for 35 % or about ₹ 1.59 lakh crore of the total Budget outlay of 3.71 lakh crore.
Besides the guarantees, the State government is also under pressure to implement the 7th Pay Commission recommendation to its employees that is estimated to cost between ₹ 15,000 crore and ₹ 20,000 crore. “The allocation in general services has been increased partly due to the expected wage revision this year,” another official said. Incidentally, the committee expenditure on salaries, pensions, interest payment and administration expenditure account to ₹95,000 crore.
