Kumaraswamy asks officials to cut down expenses after announcing farm loan waiver

Newly appointed Chief Minister of Karnataka, HD Kumaraswamy, has asked his administration to cut down on all “unnecessary expenditure” in order to strengthen the state’s finances.

Kumaraswamy has ordered an austerity drive, cutting down extravagant expenses like refurbishing and renovating government offices and residences, proposals to buy new cars and such.

The move comes after the Congress-JD(S) coalition government announced farm loan waiver of an estimated Rs 53,000 crore, an amount which was promised in the election manifesto of the JD(S). The austerity drive is being seen as a move to reduce the impact of this amount on the state’s coffers.

It is important to note, however, that the farmers had not just demanded a loan waiver, but also to make them debt-free. If pursued, the proposal would cost the Karnataka government a whopping Rs 1.15 trillion, which is more than 50 percent of the state’s entire budget of Rs 2 trillion, Mint reported.

According to a report by PRS Legislative Research, drought-prone Karnataka has the highest rates of farm indebtedness—to the tune of 77 percent of the state’s population—as against a national average of 52 percent. The report also points out that a significant section of indebted farmers are those who borrow from informal sectors such as moneylenders, family and friends.

Hence the benefit of the government’s proposal, which focuses only on institutional credit, is feared not to trickle down to all farmers.

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