For more than two years, Karnataka has been at the centre of India’s most ambitious welfare experiment. The Congress government led by Chief Minister Siddaramaiah has turned its “five guarantees” into both a social revolution and a political lifeline. Yet, even as the state celebrates their popularity, a persistent question lingers: How long can Karnataka afford its own generosity?
When Siddaramaiah returned to power in 2023, few imagined that his campaign promises, the so-called “five guarantees”, would actually see the light of day. Two years on, not only has he delivered, but he has woven them into the very fabric of his administration. “The Five Guarantees are not freebies,” he insists. “These are strategic investments made on economic and social principles. This has helped the state become No. 1 in per capita income.”
The five guarantees: Gruha Lakshmi, Gruha Jyothi, Anna Bhagya, Shakti and Yuva Nidhi together attempt to redraw Karnataka’s social contract, spending Rs 89,400 crore so far.
- Gruha Lakshmi: ₹2,000 monthly aid to every woman head of household.
- Gruha Jyothi: 200 units of free electricity per household.
Anna Bhagya: Extra 5 kg of rice per BPL member.
Shakti: Free bus travel for all women on state and city routes.
Yuva Nidhi: Unemployment support for graduates and diploma holders.
The scale is staggering. In just two years, Karnataka has spent more than ₹89,400 crore on these programmes; the 2024–25 budget alone allocates ₹51,034 crore.
Of all the guarantees, Shakti has become the most visible. Since its launch in June 2023, women passengers have made over 508 crore free trips worth ₹12,881 crore in tickets, and the programme is credited with lifting female employment by 23 per cent in Bengaluru and 21 per cent in Hubballi-Dharwad. Gruha Lakshmi, meanwhile, now covers 1.28 crore women, with a budgetary allocation of ₹28,608 crore this year, one of India’s largest direct income-support schemes.
To Siddaramaiah, this is not populism but justice. To his critics, it is fiscal adventurism dressed up as welfare.
The Comptroller and Auditor General (CAG) has already fired a warning shot. In its latest report, it noted that Karnataka’s revenue rose by only 1.8 per cent last year, while expenditure jumped 12.5 per cent, largely because of the guarantees. The imbalance has pushed the state into a revenue deficit of ₹9,271 crore and expanded its fiscal deficit from ₹46,623 crore in 2022-23 to ₹65,522 crore in 2023-24.
The CAG warned that implementing the five schemes “without rationalising existing subsidies” would “exert pressure on the state’s resources and impact fiscal deficits and debt levels.” It further observed that three of the five guarantees were subsidy-based, pushing Karnataka’s total subsidy burden to ₹60,774 crore. In short, the state’s spending appetite is growing far faster than its income.
Economists share that concern. Basavaraj Rayareddi, the Chief Minister’s own Economic Adviser, admits the arithmetic is daunting: “Rs 60,000–Rs 65,000 crore we have to spend for it (guarantees). … Many legislators are demanding funds to take up development works in their constituencies, but there is no money with the government.” His blunt confession echoes the CAG’s conclusion — that welfare is crowding out capital expenditure and squeezing funds for roads, irrigation, and infrastructure.
A policy paper from the Poornaprajna Institute of Management, Udupi, voices similar unease: “The Congress government’s focus on populist measures has raised concerns about the long-term economic health of Karnataka. While the guarantees may provide short-term relief, critics warn that they could lead to instability, jeopardising Karnataka’s reputation for fiscal discipline.”
Even politically, the tremors are visible. B Y Vijayendra, the BJP’s state president, calls the government’s spending “reckless,” arguing that “the government is unable to take the financial burden of the schemes as it doesn’t have funds for it.”
To sustain the guarantees, the state has turned to borrowing and taxation. In the 2024-25 budget, market borrowings soared to ₹63,000 crore, the highest in Karnataka’s history. To boost revenue, the government doubled stamp duties, raised excise on liquor and beer, and launched a tax recovery drive called Kar Samadhana.
Yet economists say these are stop-gap measures: “plugging leaks in a sinking ship”. Karnataka’s own tax revenue growth has plateaued, hemmed in by GST limits. The imbalance between recurring welfare expenditure and temporary revenue measures, they argue, has made the fiscal base fragile.
The CAG, again, has flagged another red signal: “Borrowings are being increasingly used to finance recurring expenditure, which is fiscally imprudent.” In other words, Karnataka is borrowing not to build assets but to pay bills — a dangerous shift for a state once admired for fiscal prudence.
If the economics of the guarantees divide opinion, the politics unite the Congress. In 2023, the promise of guarantees helped the party sweep 136 seats in the 224-member Assembly, a decisive win that gave Siddaramaiah complete control and subdued his rival, Deputy Chief Minister D K Shivakumar.
Today, no party dares challenge them. For the BJP, demanding a rollback would be political suicide; for the Congress, they are ideological DNA. What began as a welfare model has become a political doctrine, a “guarantee consensus” that no leader can afford to question.
Within the administration, confidence runs high. H M Revanna, Chairman of the Karnataka State Guarantee Schemes Implementation Authority, brushes aside fiscal alarms. “By reducing poverty levels and providing a safety net, the schemes have had a transformative effect on people’s lives,” he told New Delhi Post.
Revanna’s agency monitors implementation through district cells and taluk-level inspections. Officials point to tangible social shifts, especially among women: more mobility, higher workforce participation, and greater decision-making at home.
Mehroz Khan, a senior Congress functionary involved in implementation, admits expectations are outpacing systems: “People want faster redress of issues. For us, every citizen matters, and we try to ensure better service to more citizens by refining the processes.”
Siddaramaiah has also taken the fiscal fight beyond Bengaluru. His Our Tax, Our Right campaign accuses the Union government of short-changing Karnataka in the distribution of central taxes. He argues that states like Karnataka and Tamil Nadu contribute far more to India’s tax pool than they receive in return.
Politically, the campaign helps him corner the BJP and rally state pride. Economically, critics say it’s a smokescreen. Even with larger central transfers, they argue, Karnataka’s real problem, the structural mismatch between permanent welfare outgo and limited productive investment, would remain.
The Karnataka model embodies a moral and fiscal dilemma. Are the guarantees a bold template for equitable governance, or a slide into unsustainable populism?
The truth lies somewhere in between. Karnataka’s welfare net has undeniably improved lives, especially for women, and set a new standard for direct benefit delivery in India. Yet it has also tested the limits of prudence. The CAG’s audit, the economic adviser’s candour about empty coffers, and the state’s rising debt all point in one direction: noble intentions don’t come cheap.
(Vijay Grover is a Bangalore-based journalist and political analyst)
