Karnataka’s Rs. 100 bn proposal to build 15,000 km of rural roads across the state is facing scrutiny after the Finance Department warned that available funding may not support it. The department advised the government to be realistic about its fiscal capacity, citing drought, existing commitments and pressure on cash flow.

The proposal was announced by the D K Shivakumar-led Congress government at a Special Cabinet meeting in Mangaluru last week, midway through the financial year. The government had also cleared other projects worth about Rs. 200 bn, adding to concerns about the resources required for its wider programme.

The Finance Department said the state had exhausted its borrowing capacity for budgetary announcements in FY26-27 and would have little room to raise additional debt for projects of this size. It recorded a fiscal deficit of Rs. 229.57 bn against a permitted limit of zero, while cumulative liabilities stood at 24.94 per cent of gross state domestic product, close to the permitted 25 per cent limit under the Fiscal Responsibility and Budget Management Act.

The department also reported a balance cost of works exceeding Rs. 2 tn and pending contractor bills of Rs. 361.36 mn. In the first supplementary estimate for the recently presented budget, the government had approved another Rs. 50 bn worth of works, increasing the pressure on allocations available for new commitments.

The Finance Department said severe drought conditions could require substantial spending to protect the livelihoods of farmers and rural residents. It also estimated that the electricity subsidy for irrigation pump sets could rise by Rs. 40-50 bn because of the drought, making it difficult to fund additional projects without reallocating approved departmental allocations.

The funding concerns prompted Opposition action, with BJP legislators staging a demonstration inside the Vidhana Soudha premises. BJP state president and MLA B Y Vijayendra demanded that the government publish a White Paper on Karnataka’s financial position and explain how the proposed road programme would be financed.