India Ratings gives thumbs down to Karnataka budget

The India Ratings and Research (Fitch Group) has given thumbs down to JD(S)-Congress coalition government’s first budget presented by Chief Minister H.D.Kumaraswamy on Thursday.

The farm loan waiver will limit the State’s ability to rein in expenditure and achieve higher surplus in its revenue account, it said. A rise in revenue expenditure will hurt Karnataka’s medium-to-long-term growth prospects, it said.

The State Government has announced crop loan waiver of up to Rs 2 lakh in each case entailing an expenditure of Rs 33,000 crore.


The government, the rating agency said, needs to augment its own revenue sources and contain unproductive expenditures to be able to channel more funds toward capex in core infrastructure sectors such as education, health, sanitation and urban development. “The risk of a significant deviation from the budgeted capex to meet fiscal deficit/GSDP target remains a possibility in the event the state underachieves budgeted revenue receipts and expenditure targets,” its report said.