Vinod M Jain
Deputy Chief Minister and Revenue Minister,Dr.G. Parameshwara said it is a normal process for the Finance Department to advise and caution the Government in order to maintain fiscal discipline,and that such advice cannot be used to claim that the State Government is bankrupt or has no funds.
Replying on behalf of the Government during the discussion on the drought situation in the Legislative Assembly,he responded to what he termed the Opposition’s false allegation that the Government had gone bankrupt.
He said the Leader of the Opposition had begun by raising financial issues and claiming that the State Government was bankrupt, had no money and did not even have funds to manage the drought.These claims were based on an advisory issued by the Finance Department.
“However,it is the responsibility of the Finance Department to ensure that the Government does not run into financial difficulties,to caution against possible lapses and to advise the Government on maintaining fiscal discipline,”he said.
He said the Finance Department issues such warnings and advice irrespective of which Government is in power.
If expenditure beyond the allocation provided in the Budget is proposed, the Finance Department naturally asks where the additional funds will come from.
Expenditure cannot be incurred beyond the Budget and Finance Bill approved by both Houses.If additional expenditure is required, a supplementary Budget must be presented and the approval of the Legislature obtained.
“This is the minimum financial prudence expected of any Government,”he said.
At times,when Governments seek to announce new programmes or schemes beyond the Budget framework, the Finance Department issues cautionary advice.
The advisory currently being discussed is of the same nature, and it is therefore incorrect to use it to claim that the Government is bankrupt or has no money,he clarified.
The proposed scheme is planned for implementation over two years, 2026–27 and 2027–28.
The Finance Department had advised that launching a scheme requiring ₹1,000 crore,without a Budget allocation or funds being earmarked, could create difficulties in cash flow and financial management.
For 2026–27,the fiscal deficit stands at 2.95%, against the 3% limit permitted under the FRBM framework.The revenue deficit is ₹22,957 crore, while total liabilities stand at 24.94% of GSDP,close to the prescribed limit of 25%.
“In such circumstances,it is the Finance Department’s duty to caution the Government against exceeding the stipulated fiscal limits,”he said.
The Department had also advised that financing new schemes could be difficult until additional resource mobilisation or reallocation of already approved funds is finalised.
It suggested waiting for some time until the resources required for new schemes are firmed up.“This is financial advice. It is not a statement that the Government has no money,”Dr.Parameshwara said.
He added that it was incorrect to suggest that such advice had been issued only to the Government headed by Chief Minister D.K. Shivakumar.Similar cautions had been issued by the Finance Department to previous Governments as well.
In February 2022, during the Basavaraj Bommai Government,the Finance Department had warned that rising committed expenditure and limited revenue options could make it difficult to present a revenue-surplus Budget.
In February 2023,when the Government was considering implementation of the Seventh Pay Commission ahead of the elections,the Finance Department had again cautioned that immediate implementation could shift the burden to the next financial year,affect FRBM limits and require substantial additional borrowing.
“That advice was given during the BJP Government headed by Basavaraj Bommai.Can we therefore say that Government was bankrupt?.
Such advice is part of the Finance Department’s normal functioning,”he said.
He also recalled that the Finance Department had issued similar advice during the Government headed by B.S. Yediyurappa.
In January 2020,it had warned that the State’s own revenue collections had fallen to around 70% of the target,and that Karnataka could face serious financial stress if devolution of Central taxes did not improve.
“That may also have been during the Covid period. Bringing the prevailing situation to the Government’s attention is the Finance Department’s responsibility,” he said.
Dr.Parameshwara therefore clarified in the House that citing a Finance Department advisory to claim that the State Government is bankrupt or that its financial position is poor is far removed from the truth.
