The Centre has cleared the Karnataka government’s proposal to borrow ₹18,100 crore (of the total ₹43,731 crore to be borrowed from open market for this fiscal) for the first nine months of the financial year 2018-19.

As per the ‘Mid-Year Review of State Finances 2018-19’, tabled in the Assembly, the State requested the Centre to provide concurrence for balance requirement. No borrowings were resorted to during the first half (H1) of the year, taking into account cash position and remaining borrowings will be undertaken in the last two quarters only on necessity basis and within the permissible limit.

During financial year 2018-19, fresh off-budget borrowing of ₹3,876 crore has been allowed for the special purpose vehicle of water resources department – KBJNL, KNNL, CNNL, VJNL and KREDCL. They will be raising the funds based on both the requirement and prevailing market conditions.

Revenue surplus

KFRA Act mandates that the state should maintain revenue surplus. The State has been maintaining revenue surplus since 2004-05. Up to September 2018, revenue surplus is ₹6,086 crore as compared to the budget estimate of ₹106 crore, reflecting a comfortable mid-year revenue position for the state.

As KFRA requires that fiscal deficit be kept within 3 per cent of GSDP, fiscal deficit was estimated at 2.89 per cent of GSDP at ₹40,753 crore. The state has a fiscal deficit of ₹3,735 crore at the end of September 2018.

Outstanding liabilities

Total outstanding liabilities (TOL) to GSDP as at the end of the financial year 2017-18 was 17.78 per cent as against the KFRA ceiling limit of 25 per cent for that year.

While the TOL of the State in absolute numbers is expected to increase from ₹242,420 crore in FY 2017-18 to ₹292,220 crore in FY 2018-19, the GSDP of the State is projected to increase from ₹1,310,879 crore to ₹1,408,112 crore during the same period (as estimated by GoI’s MoF).

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