Deputy Chief Minister and Revenue Minister G. Parameshwara on Thursday, 24 September 2026, firmly rejected Opposition claims that Karnataka was facing a financial crisis, clarifying in the Legislative Assembly that advisory notes issued by the Finance Department urging fiscal discipline are standard practice and must not be read as evidence that the state government is bankrupt or cash-strapped.

What Parameshwara Said in the Assembly

Responding on behalf of the government during a debate on the drought situation, Parameshwara argued that the Finance Department's role is precisely to flag when proposed expenditure exceeds Budget allocations. 'If expenditure beyond the allocation provided in the Budget is proposed, the Finance Department naturally asks where the additional funds will come from. If additional expenditure is required, a supplementary Budget must be presented, and the approval of the Legislature obtained,' he said.

He stressed that such cautionary notes are a feature of every government's functioning, not a distress signal unique to the current administration.

Historical Precedents Cited

To undercut the Opposition's framing, Parameshwara cited three earlier instances when similar advisories were issued under Bharatiya Janata Party (BJP) governments. In January 2020, during the B.S. Yediyurappa administration, the department flagged that revenue collections had fallen to around 70 per cent of the target. In February 2022, under the Basavaraj Bommai government, it warned that rising committed expenditure and limited revenue options could make a revenue-surplus Budget difficult to present. In February 2023, the department cautioned that immediate implementation of the Seventh Pay Commission could breach FRBM limits and necessitate additional borrowing.

'Can we therefore say that the government was bankrupt? Such advice is part of the Finance Department's normal functioning,' Parameshwara said.

Karnataka's Current Fiscal Position

On the state's finances, Parameshwara disclosed that the fiscal deficit for 2026–27 stood at 2.95 per cent, within the 3 per cent ceiling prescribed under the Fiscal Responsibility and Budget Management (FRBM) framework. The revenue deficit was reported at ₹22,957 crore, while total liabilities were at 24.94 per cent of GSDP — close to, but still within, the 25 per cent prescribed limit. He acknowledged that the Finance Department had specifically advised caution over a proposed scheme requiring ₹1,000 crore across 2026–27 and 2027–28, suggesting funds be earmarked or reallocated before rollout. 'This is financial advice. It is not a statement that the Government has no money,' he said.

Drought Response: Government's Account

Parameshwara also defended the government's handling of the drought, saying it acted within three days of receiving the India Meteorological Department's warning on 13 April that the southwest monsoon could fall five per cent below normal. Then Chief Minister Siddaramaiah convened a meeting on 16 April with Deputy Commissioners and Zilla Panchayat CEOs, attended by ministers including D.K. Shivakumar, with departments directed to roll out precautionary measures.

Karnataka recorded an overall rainfall deficit of 36 per cent, with 177 taluks declared drought-hit. Drinking water problems were reported in 531 villages across 111 taluks and 81 wards in 15 urban local bodies. The government released ₹117 crore for drinking water needs and provided an additional ₹189 crore through MLAs, with each MLA allocated ₹1 crore. Around ₹420 crore was available in PD accounts under the State Disaster Response Fund (SDRF) for drinking water and fodder requirements.

'There is no shortage of water. If routine or administrative problems arise, they must be resolved separately,' Parameshwara said, adding that field-level monitoring and district coordination were ongoing.

Political Context

The Opposition had used the Finance Department's advisory — which reportedly cautioned against unbudgeted spending — as ammunition to allege fiscal mismanagement by the Congress-led government. Parameshwara's pushback is aimed at neutralising that narrative ahead of upcoming Budget discussions. Notably, with Karnataka's total liabilities at 24.94 per cent of GSDP, the state has limited headroom for additional borrowing, making the Finance Department's caution structurally significant even if politically routine.