K'taka: Drought, debt threaten development ambitions

BENGALURU

Karnataka faces a difficult test of fiscal management as a severe rainfall deficit threatens rural livelihoods, raises the demand for drought relief and threatens to derail development plans. The crisis comes at a time when the state is already grappling with a substantial revenue deficit, mounting financial commitments and a backlog of unfinished projects.

The southwest monsoon delivered just 563 mm of rainfall against the normal 852 mm, a deficit of over 35 per cent – the worst monsoon performance since 1971, according to the Karnataka State Natural Disaster Monitoring Centre. The government has declared 226 of the state’s 240 taluks drought-affected, with crop losses estimated at ?62,481 crore across nearly 47.09 lakh hectares.

The consequences extend beyond agriculture. Crop failures threaten farm incomes, rural consumption and agricultural employment, while increasing pressure on the government to provide input subsidies, drinking water and fodder. The state has sought ?7,142.64 crore in drought relief under National Disaster Response Fund norms.

The gap between estimated crop losses and the relief sought underlines the scale of the challenge facing farmers and the exchequer. Water availability adds to the concern.

Data from the Karnataka Water Resources Information System show that the four major Cauvery-basin reservoirs – KRS, Kabini, Hemavathy and Harangi – held a combined live storage of just 38.33 TMC on October 22, against 61.64 TMC on the same date last year, a decline of nearly 38 per cent. With depleted reserves having to meet drinking-water needs, irrigation requirements and mandated downstream releases, the state faces difficult choices over allocating water in the coming months. The fiscal implications are equally serious.

The 2026-27 Budget estimates a revenue deficit of ?22,957 crore and a fiscal deficit of ?97,448 crore, or 2.9 per cent of gross state domestic product. Outstanding liabilities are projected at 25 per cent of GSDP.

Meanwhile, expenditure on the five guarantee schemes is estimated at ?51,286 crore this financial year – around 12 per cent of expenditure excluding debt repayment. A Finance Department note in September warned of limited borrowing headroom, pending bills and a backlog of ongoing works exceeding ?2 lakh crore.

The choice, therefore, cannot simply be between welfare and development. The guarantees support household consumption, particularly among vulnerable sections, while investment in irrigation, water security, roads, healthcare and education is essential for long-term growth. Abruptly curtailing either could deepen economic distress.

Karnataka needs transparent prioritisation of projects, tighter expenditure controls, faster recovery of pending dues and stronger revenue mobilisation. It must also press the Centre for timely drought assistance.

Above all, drought management must become an investment in resilience. Watershed development, groundwater recharge, efficient irrigation and crop diversification can reduce future losses. Fiscal discipline and social protection must reinforce each other if Karnataka is to protect livelihoods today without mortgaging its development tomorrow.