The Karnataka government on Tuesday decided to borrow Rs 33,000 crore to cope with the revenue loss owing to COVID-19 pandemic situation and take up development works, Law and Parliamentary Affairs Minister JC Madhuswamy said. The state cabinet meeting decided to amend the Fiscal Responsibility Act to increase its borrowing limit from three per cent to the five per cent of the GSDP, utilising the provision proposed by the Centre, he said.
"The Centre this year has increased the borrowing (limit)up to 5 per cent of GSDP due to COVID. Hence, we have decided to change the state Fiscal Responsibility Act to increase our borrowing from three per cent to five per cent," Madhuswamy told reporters. "After the amendment, the state will be able to borrow Rs 36,000 crore…. We have decided to borrow Rs 33,000 crore to start development works," which had been impacted due to severe revenue loss following the COVID-19 pandemic, he added.
When asked why Karnataka went for borrowing when several other states were demanding that Centre should borrow and give it to the states, Madhuswamy said such demand was made at the GST Council meeting recently. He said the state's demand for Rs 11,000 crore of its share on GST remains and it will not compromise on that.
Madhuswamy clarified that the two per cent increase in the borrowing was only a one-time measure that too in view of the COVID situation. He conceded that the increased borrowing will be a burden on the state. "Because we are in such a situation that we are forced to borrow," he added.
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