Bengaluru, Sep 16, 2020: The Karnataka Cabinet on Tuesday decided to borrow Rs 33,000 crore in order to fund development works as the government’s revenues have been hit due to the Covid-19 pandemic this fiscal.
The Cabinet decided to amend the Karnataka Fiscal Responsibility Act to borrow beyond the limit of 3% of the gross state domestic product (GSDP), Law Minister JC Madhuswamy said, briefing reporters.
This comes on the back of the Centre raising the borrowing limit from 3% to 5% for all states to sail through the economic crisis.
"The additional 2% borrowing on the GSDP will make Karnataka eligible to get Rs 36,000 crore. Of this, we have decided to borrow Rs 33,000 crore,” Madhuswamy said. “It’s established by now that state governments have suffered a massive blow to revenues because of Covid-19. Karnataka also is facing a similar crisis. This borrowing will help us take up development works," he said.
Karnataka’s total liabilities for the 2020-21 fiscal is estimated to be Rs 3.68 lakh crore. This includes Rs 52,918 crore that Chief Minister BS Yediyurappa said, in his budget speech, will be borrowed.
The Karnataka Fiscal Responsibility Act mandates that the state’s liabilities should not exceed 25% of the GSDP.