Karnataka CM Siddaramaiah’s economic advisor Basavaraj Rayareddy has reportedly stated that guarantees have become a huge financial burden on the state government. Rayareddy was alluding to the freebies that the Congress party had promised in its manifesto ahead of the Karnataka state assembly elections.
“As we have directed Rs 58,000 Cr for guarantees it has become a huge financial burden to us. We are holding discussions on what to do. In the primary stage after implementing guarantees we are looking into what changes must be brought in. As an economic advisor, I’m looking into how to get funds from the state and centre to fund guarantees,” Republic TV quoted him as saying.
#BREAKING | Karnataka CM Siddaramaiah's economic advisor Basavaraj Rayareddy states that guarantees have become a huge burden.
— Republic (@republic) January 9, 2024
"As we have directed Rs 58,000 Cr for guarantees it has become a huge financial burden to us. We are holding discussions on what to do. In the primary… pic.twitter.com/AkiiffHNps
Congress rode on the anti-incumbency wave against the BJP government in Karnataka on the promises of providing a slew of freebies, including free electricity, ahead of the state assembly elections earlier last year. The party won the elections in a landslide victory, which many political pundits and election observers saw as a direct mandate to the guarantees promised by the party.
Election guarantees hampering developmental projects in Karnataka
But the party had been struggling to fulfil its promises right from the start, owing to the state’s finances and the economic feasibility of freebies that political parties often ignore in their bid to gain power. In June 2023, Karnataka Minister of Small-Scale Industries and Public Enterprises Sharanabasappa Darshanapur admitted that the guarantee schemes announced by the party will take a direct toll on the infrastructure development within the state.
The Congress Minister stated that infrastructure development in the state would be affected to some extent during the first year of the Congress government in office. He claimed that this would happen because of the guarantee schemes launched by the Siddaramaiah government.
The minister pointed out that there will be a financial burden of Rs 40,000 crore to Rs 50,000 crore on the exchequer due to these guarantee schemes.
While the Congress party had pledged to provide free electricity to citizens up to a threshold limit, the increase in power tariffs in the state was seen as a means to fund the poll promise. The energy costs and power tariffs in Karnataka were hiked by Rs 2.89 per unit in June, leaving citizens to shell out an additional Rs 2.89 per unit if their power usage exceeds the 200 units slab while paying the power bill.
In July 2023, Karnataka Deputy CM DK Shivakumar candidly admitted that the state government was suffering from a paucity of funds to bankroll development projects this year as they had budgeted Rs 40,000 crores for implementing the five election guarantees.
Shivakumar made the comments in response to inquiries regarding the discontent expressed by certain Congress MLAs who have requested funds for the development of their respective constituencies. The Congress Legislature Party (CLP) has scheduled a meeting this evening to address the concerns of these MLAs who are disappointed that their constituencies have not received adequate development funds.
