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Karnataka Chief Minister HD Kumaraswamy told the Legislative Assembly on Tuesday that the overall debt of the State as on March 31, 2018 stood at ₹1,46,283 crore with a majority of the State’s borrowings coming from the open market and the National Bank for Agriculture and Rural Development (Nabard).
The State government has set aside ₹16,209 crore in the annual budget for servicing the debt. The Chief Minister clarified that not a single asset or property has been pledged against borrowings.
Recently, the Comptroller and Auditor General (CAG) in its report for the year ended March 2017 had observed that Karnataka’s public accounts borrowings constituted 29 per cent and NSSF loans were 9 per cent. The Central government loans formed 6 per cent, off-budget borrowings 5 per cent and negotiated loans 2 per cent of the total fiscal liabilities.
Open market borrowings
As per the Karnataka Fiscal Responsibility Act 2002, the Fiscal Management Review Committee (FMRC) constituted under the Chief Secretary reviewed the current as well as projected fiscal situation and debt position of the State on July 3. According to Medium-Term Fiscal Plan (MTFP) 2018-2018, FMRC noted the fact that due to uncertainties in GST collections, open market borrowing was resorted to during the last week of second quarter in 2017-18 deviating from the regular trend where no borrowing was resorted to in the first half of the year. However, the FMRC also noted that during the current financial year, open market borrowing will have to start from the second quarter, depending on actual cash flow.
Own taxes
The State’s own tax revenue for 2018-19, including GST compensation is estimated to be ₹1,03,444 crore, which is an increase of 12.78 per cent over the Revised Budget Estimate of 2017-18. About ₹8,163 crore is expected to be collected from non-tax revenues. The State government expects to receive ₹36,215 crore by way of the share in Central taxes in the Budget 2018-19 and another ₹14,942 crore as grants from the Centre. These revenue receipts are estimated to be supplemented by gross borrowings of ₹39,328 crore, non-debt capital receipts of ₹75 crore and recovery of loans to the extent of ₹129 crore.
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