Karnataka BJP protests over Finance Dept warning on limited fiscal space

BJP leaders on Wednesday staged a protest at the Vidhana Soudha premises, accusing the Congress government in Karnataka of pushing the state towards a financial crisis and failing to ensure development.

The protest came a day after the Karnataka Finance Department cautioned against taking up major expenditure projects at this stage, citing limited fiscal space and calling for a “realistic and prudent” approach to funding.

The demonstration was led by BJP state president B Y Vijayendra, Leader of Opposition in the Legislative Assembly R Ashoka and Leader of Opposition in the Legislative Council Chalavadi Narayanaswamy near the Kengal Hanumanthaiah statue at Vidhana Soudha. Several MLAs and MLCs also participated.

The BJP demanded what it described as proper governance and alleged that the Finance Department's observations had exposed the state's precarious financial position.

The party also accused the Congress government of making “false assurances” despite financial constraints and alleged that development work in Karnataka was being affected.

The Finance Department's observations were made on Tuesday while examining a proposal for the Chief Minister's Rural Road Connectivity Scheme, estimated to cost Rs 10,000 crore.

In its note, the department said the project was proposed to be implemented during 2026-27 and 2027-28. Starting a major project for which funds had neither been budgeted nor earmarked could create cash-flow and fiscal-management challenges, it cautioned.

Chief Minister D K Shivakumar, who also holds the Finance portfolio, acknowledged the department's advice on Tuesday and said there was nothing wrong with it cautioning the government as it was acting in the government's interest.

According to the Finance Department's assessment, Karnataka's fiscal deficit for 2026-27 is projected at 2.95 per cent, against the three per cent limit permitted under the Fiscal Responsibility and Budget Management framework.

The department also highlighted the state's existing financial commitments, saying the balance cost of ongoing works exceeded Rs 2 lakh crore.

Pending bills in four major departments -- Public Works, Water Resources, Minor Irrigation, and Rural Development and Panchayat Raj -- alone amounted to Rs 36,136 crore, it said.