At only 61%, utilisation lags allocations; depts blame delayed fund releases | Bengaluru News
Bengaluru: When chief minister Siddaramaiah presents the state budget — his record 16th — for the 2025-26 fiscal Friday, he would do well to bear in mind how the state fared in spending the massive outlay of Rs 3.7-lakh-crore from his previous budget. It reveals a concerning pattern in expenditure management.
In his 15th budget last year, the total allocation for all govt departments, excluding debt servicing and other commitments, stood at more than Rs 3.2-lakh-crore. Yet, expenditure until Jan is barely Rs 2-lakh-crore — just 61.4% of funds used.
While officials from the department of planning, programme monitoring & statistics are still collating data for Feb, total spending is expected to hover around 72%. This leaves departments in a rush to spend in March, but experts reckon some 20% of allocated funds will likely remain unspent.
“There is no point in projecting lofty allocations unless departments use it efficiently,” said RV Deshpande, chairman, Karnataka State Administrative Reforms Commission. “The slow pace of spending also reflects sluggish development. We will recommend a slew of measures to address this.”
Department-wise, energy, with an allocation of Rs 23,158 crore, performed relatively better using 80% of its budget. But major departments with substantial budgets lagged. Department of women and child development, with an allocation of Rs 34,405 crore, has only used 62.6% of its funds, potentially affecting crucial social welfare programmes like the Gruha Lakshmi scheme.
If that is low, there are others lower down the ladder. The commerce and industries department (small) has spent only 35.3% of its Rs 1,247 crore allocation, indicating serious delays in industrial development initiatives. The civil supplies department, which is implementing Siddaramaiah’s pet guarantee scheme, Anna Bhagya, has used only 48.2% of its Rs 9,978 crore allocation. Infrastructure-related departments show mixed performance, with public works department having spent only 59.4% of its Rs 9,926 crore.
Officials from several departments attribute the lag in spending to a delay in release of funds by both state and central govts. As of Jan, of the Rs 3.2-lakh-crore outlay, total funds released by the state govt stood at Rs 2.2-lakh-crore. Of this, departments collectively spent more than 86%.
The release pattern appears to be front-loaded rather than following a proportional monthly distribution, which tends to impact execution of planned developmental projects in the latter part of the fiscal. For example, the revenue department already received releases of Rs 2,833.5 crore against its annual allocation of Rs 3,053 crore, indicating an accelerated disbursement pattern.
Further, the govt shows two categories in release and expenditure: ‘Productive’ and ‘admin/salary’. Of the Rs 2.2-lakh-crore released, nearly Rs 1.3-lakh-crore is part of ‘productive allocation’ and Rs 93,359 crore is for ‘admin/salary allocation’.
Departments spent nearly Rs 1.2-lakh-crore released under ‘productive’ allocation and Rs 76,511.6 crore under ‘admin/salary’ allocation. While on paper this indicates that the govt spent most of its money on productive activity, it may not be the case.
“While the state releases funds as and when departments present bills, the Centre releases funds for its schemes in two tranches, and very often the second instalment comes in March. But yes, departments should improve efficiency,” said BV Madhusudan Rao, a former senior research adviser, Centre for Budget and Policy Studies.
In his 15th budget last year, the total allocation for all govt departments, excluding debt servicing and other commitments, stood at more than Rs 3.2-lakh-crore. Yet, expenditure until Jan is barely Rs 2-lakh-crore — just 61.4% of funds used.
While officials from the department of planning, programme monitoring & statistics are still collating data for Feb, total spending is expected to hover around 72%. This leaves departments in a rush to spend in March, but experts reckon some 20% of allocated funds will likely remain unspent.
“There is no point in projecting lofty allocations unless departments use it efficiently,” said RV Deshpande, chairman, Karnataka State Administrative Reforms Commission. “The slow pace of spending also reflects sluggish development. We will recommend a slew of measures to address this.”
Department-wise, energy, with an allocation of Rs 23,158 crore, performed relatively better using 80% of its budget. But major departments with substantial budgets lagged. Department of women and child development, with an allocation of Rs 34,405 crore, has only used 62.6% of its funds, potentially affecting crucial social welfare programmes like the Gruha Lakshmi scheme.
If that is low, there are others lower down the ladder. The commerce and industries department (small) has spent only 35.3% of its Rs 1,247 crore allocation, indicating serious delays in industrial development initiatives. The civil supplies department, which is implementing Siddaramaiah’s pet guarantee scheme, Anna Bhagya, has used only 48.2% of its Rs 9,978 crore allocation. Infrastructure-related departments show mixed performance, with public works department having spent only 59.4% of its Rs 9,926 crore.
Officials from several departments attribute the lag in spending to a delay in release of funds by both state and central govts. As of Jan, of the Rs 3.2-lakh-crore outlay, total funds released by the state govt stood at Rs 2.2-lakh-crore. Of this, departments collectively spent more than 86%.
The release pattern appears to be front-loaded rather than following a proportional monthly distribution, which tends to impact execution of planned developmental projects in the latter part of the fiscal. For example, the revenue department already received releases of Rs 2,833.5 crore against its annual allocation of Rs 3,053 crore, indicating an accelerated disbursement pattern.
Further, the govt shows two categories in release and expenditure: ‘Productive’ and ‘admin/salary’. Of the Rs 2.2-lakh-crore released, nearly Rs 1.3-lakh-crore is part of ‘productive allocation’ and Rs 93,359 crore is for ‘admin/salary allocation’.
Departments spent nearly Rs 1.2-lakh-crore released under ‘productive’ allocation and Rs 76,511.6 crore under ‘admin/salary’ allocation. While on paper this indicates that the govt spent most of its money on productive activity, it may not be the case.
“While the state releases funds as and when departments present bills, the Centre releases funds for its schemes in two tranches, and very often the second instalment comes in March. But yes, departments should improve efficiency,” said BV Madhusudan Rao, a former senior research adviser, Centre for Budget and Policy Studies.
