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Karnataka’s capital expenditure grew at a compounded annual growth rate (CAGR) of 10.5 per cent during the financial year 2010-2017 (BE) and was 18.5 per cent of the total expenditure.
The state government’s expenditure priorities — a higher proportion and faster growth of developmental expenditure — are in line with its requirements, said India Ratings and Research (Ind-Ra).
Revenue expenditure increased at a CAGR of 15.5 per cent while interest payment grew at a CAGR of 13.5 per cent during FY2010-FY2017BE.
According to Ind-Ra, committed expenditure (salary, pension and interest payment) as a percentage of revenue expenditure is projected at 35.43 per cent for FY2017 (RE) as against 36.30 per cent in FY2016.
Capital expenditure as a percentage of total expenditure marginally increased to 16.2 per cent in FY2017(RE) as against 15.4 per cent in FY2016.
As per the state government’s revised estimates, outstanding debt to GSDP ratio is projected to moderate further to 18 per cent in FY2017(RE) from 23.86 per cent and 23.14 per cent in FY2016 and FY2015, respectively, which lends strength to the state’s credit profile.
KNNL term loan Keeping the fiscal parameters in mind, India Ratings has assigned Karnataka Neeravari Nigam Limited (KNNL)’s new term loan amounting to ₹300 crore a ‘Provisional IND AA-(SO)’/Stable.
KNNL receives full support from the Karnataka government in the form of unconditional and irrevocable guarantees extended towards the timely payment of bonds and debt facilities. The government further provided for budgetary support to KNNL towards payment of principal and interest on the due dates and funding the escrow account well before the service date.
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