BENGALURU: In a straight warning to chief minister DK Shivakumar and his cabinet, the state finance department has asked for “prudence” in expenditure and to be prepared for budgetary cuts across departments.Reason: The state government is facing a financial crisis with liabilities of the state at 24.94% of the gross state domestic produce (GSDP).The maximum limit as per the fiscal responsibility and budgetary management (FRBM) is 25 per cent of the GSDP.In its leaked note, the FD has said that one of the biggest concerns for the state is the current drought situation in the state which in itself is a big financial concern.“In view of the severe drought, it is likely that there will be a significant requirement of additional funds over and above the budget allocations for the current year for drought relief and drinking water,” read the note.The FD said that the exact amount of monetary requirement for the drought will only be assessed after the government of India responds to a memorandum from the state government which is to be submitted shortly.In fact, preliminary assessment of the FD is that the state government will require an additional Rs 4,000 to Rs 5,000 for clearing the irrigation pumpsets (IP) subsidies, over and above the budget allocations.“In the current scenario, even a part of the funds needed for the proposals to be met will lead to cutting down from the allocations marked to other departments. This will delay or stop other works,” said the note.The note also claims that there is already an existing cash crunch including funds for salaries of transport corporations, irrigation corporations and electricity supply companies.Placing the serious nature of the financial burden on paper, the FD has said there is a whopping Rs 2 lakh crore balance cost of projects which are pending with the pending bills in the four major departments of PWD, Water Resources, Minor Irrigation and RDPR itself amounting to Rs 36,136 crore.Responding to the leaked FD note, CM Shivakumar said he was aware of the concerns of his department but there was also the larger interest of the state which is to be considered.“Being a finance minister I know which programmes to cut down and which to continue with. We need to survive with these five guarantees amid the inflation. There is nothing wrong in their advice,” he said.Responding to the BJP allegations that the FD note was proof of the government going bankrupt, Shivakumar said let those criticising it ensure that the centre gives Karnataka its share of the promised money.“The Rs 5,300 crore (for Upper Bhadra project) which was promised to Karnataka by finance minister Nirmala Sitharaman and former CM Basavaraj Bommai, let them get that money. We are standing with a begging bowl for our share of the funds,” he chided.
