Weighed down by guarantees, Karnataka remains top borrower in South; it's ticking bomb, warns BJP

Karnataka is expected to borrow Rs 48,000 crore in January-March period, the highest among the five southern states, as the Congress regime struggles to support the five flagship guarantee schemes amid the weight of unbridled government expenditure. The government would raise open market loans of Rs 4000 crore every week over the 12 weeks.

Chief Minister Siddaramaiah on Sunday said he would present the budget in March. The event is likely to be on March 14, also Siddaramaiah’s 16th budget speech. In his budget speech in February, last year, the CM had projected open market loans at Rs 96,840 crore in 2024-25 from what was Rs 44,549 crore in 2022-23.

Karnataka has confirmed its participation in the weekly auctions every week, pegging its weekly need of debt at Rs 4000 crore. While the RBI expects the total borrowing by all states at Rs 4,73,477 crore, Karnataka’s share itself makes up more than 10%.


The southern state was the top loan seeker in the Oct-Dec quarter too with its targeted open-market borrowing of Rs 55,000 crore.

In 2023-24, soon after coming to power, the Congress regime rolled out the guarantee welfare schemes. In 2024-25, the government set aside Rs 53,674 crore, which was 47% higher than the revised estimates for 2023-24. The expenditure is, however, expected to touch Rs 60,000 crore with more than half of it going for the Gruha Lakshmi scheme, alone. A woman head of a family gets Rs 2000 every month under the schemes.

This fiscal year, the scheme will take 63% of the total estimated expenditure on social welfare and nutrition, according to an analysis by PRS Legislative Research. The share of public debt is estimated to increase from 75% in 2021-22 to 78% in 2024-25. This is primarily due to an increase in open market borrowings (from 68% of total liabilities to 71%), the analysis added.

Deputy Opposition leader Arvind Bellad (BJP) has expressed alarm that the Congress was recklessly pushing the state towards financial ruin. “Where is this money going? Not into industries: they’re leaving for other states. Not into development—there are no visible works to justify this debt.” Half of the borrowings, the BJP leader said, were going for servicing the past loans. The high debts were a ticking bomb for the state’s economy. “How long will the people suffer while the government prioritizes populism over progress?” Aravind said.

In its pre-budget memorandum submitted to Finance Minister Nirmala Sitharaman in Rajasthan, last month, Karnataka has sought generous support from the Centre for its programmes.

Southern States: Open Market Loans

State	Expected Market Borrowing
Andhra Pradesh	Rs 11,000 Cr
Karnataka	Rs 48,000 Cr
Kerala	Rs 17,000 Cr
Tamil Nadu	Rs 45,000 Cr
Telangana	Rs 30,000 Cr

(Jan-March 2025 period) (Source: RBI)