'Disastrous impact of freebies': Mohandas Pai blasts Siddaramaiah after Karnataka HM says no fund for development

Mohandas Pai, chairman of Aarin Capital and former Infosys CFO, has sharply criticised the Karnataka government's fiscal strategy under Chief Minister Siddaramaiah, calling it a case of "disastrous" welfare spending that has left no room for development.

"Very sad to see the disastrous impact of freebies by our Karnataka CM Siddaramaiah. Even HM (Home Minister G Parameshwara) says so — no money for development, investments, job creation," Pai said on Tuesday. He added, "Three budgets are over, no money for devp. Two more to go. So by five years what devp will Karnataka see? Jobs?"

Pai's remarks came days after Karnataka Home Minister G Parameshwara publicly admitted that the state had run out of funds for major development projects. At a public event in Bagalkot, Parameshwara said, "We don’t have money, even Siddaramaiah doesn't have funds now. We’ve already given everything to the people in the form of rice, dal, and oil, yes even oil."

Parameshwara attributed the fiscal shortfall to the Congress government's heavy expenditure on its flagship welfare schemes—popularly referred to as the "five guarantees." The programs, which include cash transfers and food subsidies, have consumed a large portion of the state's budget since the party took office in 2023.

Amid the funding crisis, the Karnataka Home Minister urged local leaders to shift their focus toward central assistance. "You should take up a big project, something worth Rs 1,000 crore. Don't be afraid of the amount... Send the proposal to the Central Government," he said, encouraging development plans for the Badami region.

In February, India Today reported that thousands of beneficiaries under the Gruha Lakshmi scheme had not received their promised monthly ₹2,000 payments since November–December 2024. Additional cash transfers under the Anna Bhagya program were also delayed for more than five months.

A Karnataka Development Programme report by the state’s Planning and Statistics Department flagged significant deficits in implementation across these schemes, with financial shortfalls running into several thousand crores.

In December 2024, the Karnataka government had reportedly explored mortgaging state assets to fund key infrastructure projects. Bengaluru’s civic body, BBMP, was said to be seeking ₹19,000 crore through asset pledging to finance the Bengaluru Twin Tunnel Project.

As the state struggles with stalled payments, mounting liabilities, and few resources for capital expenditure, critics like Pai say the long-term cost of short-term populism is becoming clear.

(With inputs from Sagay Raj)