The state grapples with an unprecedented financial crunch that reflects the Karnataka Congress government’s fiscal mismanagement. The government is struggling to clear pending bills amounting to Rs 2,500 crore owed to contractors in the Minor Irrigation Department. These outstanding bills are associated with various ongoing irrigation and water management projects, including the Sanjeevini Lake development, comprehensive lake rejuvenation, lift irrigation schemes, and other essential works. To compound the issue, the government has been forced to divert funds from the District Disaster Fund to finance urgent repair works, signalling a deeper financial malaise within the state administration.
The financial mismanagement has drawn sharp criticism from opposition parties, as the government prioritises new projects even when it cannot clear its existing dues. The government has increasingly turned to alternative funds, including the State Disaster Relief Fund (SDRF), to address the ongoing financial crisis and keep repair works in motion. However, this approach has led to growing concerns about the sustainability of public finances and the potential long-term consequences of diverting funds meant for disaster relief into routine government expenses.
Struggling to Pay Bills, Government Targets Other Departments for Funds
The government’s inability to pay contractors’ dues has exposed the state’s deepening fiscal issues. The Minor Irrigation Department has been saddled with numerous ongoing projects. Still, Congress’s lack of foresight in managing its budget has left it unable to meet even basic financial obligations. Despite this, it has now turned its attention to other departments to allocate funds for repair and maintenance works, creating further pressure on an already overburdened treasury.
As per the 2024-25 Budget, the state government announced 115 projects to be undertaken at an estimated cost of ₹200 crore. However, in light of the current financial situation, the government has instructed the Minor Irrigation Department to review its ongoing works and prioritise them within the existing funds allocated to the Department, making it clear that no new funds will be available for additional projects. The government’s decision to allocate funds only for ongoing works indicates a lack of financial planning and foresight, leaving no room for new, much-needed initiatives.
In a letter dated August 12, 2024, the Minor Irrigation Department informed the state government about the status of ongoing projects such as the Yadalli-Teranalli Lift Irrigation Project. This ₹143.80 crore project was approved by the Water Resources Department in 2023, and the tendering process has already been completed. Despite the work being underway, the government has insisted on proceeding with additional proposals, ignoring the state’s current financial limitations.
Finance Department Rejects Proposals for New Projects
Adding to the growing concerns, the Finance Department has repeatedly rejected proposals for new projects. Throughout 2024, the Finance Department issued a series of letters advising the Minor Irrigation Department to halt the submission of new proposals due to the massive backlog of pending bills and the ongoing workload under existing projects. The Finance Department has clarified that no new proposals can be approved in the current financial climate. The focus should remain on completing and funding the ongoing works that have already been sanctioned.
Several letters the Finance Department wrote to the Minor Irrigation Department between March and November 2024 explicitly state that new projects cannot be taken up due to the high volume of ongoing works and the lack of available funds. Despite these warnings, the government has continued to push forward with new initiatives, including constructing bridges and barrages and lifting irrigation projects that require significant funding. The Finance Department, however, has reiterated that the priority must be to complete ongoing works before considering new projects.
On August 8, 2024, the Finance Department sent another letter to the Minor Irrigation Department regarding the proposed construction of a Bridge-cum-Barrage across the Tungabhadra River, with an estimated cost of Rs 397.50 crore. This was one of several projects announced in the 2024-25 Budget. However, due to the government’s strained finances, the Finance Department clearly stated that funds could not be allocated for such projects.
Similarly, on September 24, 2024, the Finance Department sent a letter to the Minor Irrigation Department, stating that no new works could be undertaken until the existing projects were completed and bills were paid. The Department was asked to review all outstanding proposals and focus on completing the approved projects with the available funds. Further letters sent on October 3, 4, and 5 of 2024 reiterated the same point, stating that new projects could not be approved given the high volume of ongoing works and the urgent need to allocate funds.
Financial Mismanagement and Impact on State Treasury
The government’s repeated failure to manage the state’s finances is evident because it continues submitting proposals for new projects while struggling to pay off existing bills. In a letter written on October 8, 2024, the Finance Department warned that no new works could be undertaken because the government needed to prioritise funding for ongoing projects that had already been approved. The Finance Department clarified that these ongoing works had to be funded first and foremost, and no additional funds would be allocated to new initiatives.
This pattern of fiscal mismanagement has resulted in a strained treasury, with no new funds available for the projects that the state government has been promising to the people. The Congress government’s fiscal irresponsibility is also evident in its handling of guarantee schemes, which have burdened the exchequer heavily. While the government continues to announce new projects and schemes, it has failed to effectively manage its cash flow, creating an unsustainable financial situation that could lead the state into a fiscal crisis.
Calls for Accountability Amid Allegations of Financial Irresponsibility
The opposition has raised alarm over the Karnataka Congress government’s financial practices, warning that the state could face bankruptcy if this trend continues. There are growing fears that the government’s inability to manage its finances could collapse essential services, especially in areas like irrigation, water supply, and infrastructure development. The opposition has also accused the government of lacking transparency in its dealings with contractors, with many alleging that the government is deliberately delaying payments to vendors and contractors to cover up its own financial mismanagement.
The Finance Department’s letters to the Minor Irrigation Department serve as a grim reminder of the financial mess created by the Congress government, with each letter emphasising the need to delay new projects due to the state’s inability to fund them. The letters also clarify that proposals with significant financial impacts on the state budget will not be entertained until the current fiscal situation improves.
Despite the dire warnings from the Finance Department, the government appears to be proceeding with new announcements and projects, further exacerbating the financial crisis. The Congress government’s failure to address the growing backlog of payments and its ongoing push for new projects, even in the face of mounting debt, has raised serious concerns about its ability to govern effectively.
A Growing Financial Crisis
With Rs 2,500 crore worth of pending bills and no clear plan for addressing the state’s financial issues, the Karnataka Congress government is now facing an increasingly dire fiscal situation. The government’s refusal to prioritise existing projects and its continued push for new initiatives without the necessary funds exacerbate the crisis. As the Finance Department repeatedly points out, the focus must be on completing the ongoing works, paying the outstanding bills, and ensuring the state’s fiscal health before committing to any new ventures.
The opposition and citizens alike call for accountability and transparency in the management of public funds. However, with the state treasury rapidly running out of funds and new projects being greenlit despite the clear warnings from the Finance Department, the future of Karnataka’s public finances remains uncertain. If the government continues down this path, the state may find itself in a situation where essential services, including those in the Minor Irrigation Department, are severely compromised.
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