'You are diverting our taxes...': Mohandas Pai takes aim at Karnataka’s subsidy spending

Former Infosys CFO Mohandas Pai launched a sharp critique at Karnataka Deputy Chief Minister DK Shivakumar, accusing the government of neglecting basic civic duties in favor of populist measures. Taking to X (formerly Twitter), Pai wrote, “@DKShivakumar cannot the streets and footpaths at least be cleaned to allow citizens to walk? Does this take much money? You are diverting our taxes to your freebies but cannot you ensure streets are cleaned. Big shame we have a govt which cannot even keep streets clean.”

Pai’s post tapped into a larger debate around the state’s fiscal priorities, as highlighted in a recent Reserve Bank of India (RBI) report on state finances. The report warned that excessive spending on subsidies—such as free electricity, farm loan waivers, and cash transfers—could crowd out resources needed for critical infrastructure and social services.

The RBI’s study noted that state governments, while maintaining fiscal discipline with deficits under 3% of GDP, have seen rising expenditures on populist measures. For Karnataka, this includes schemes such as free electricity for agriculture, monetary support for women, and other cash transfers. The RBI cautioned that these expenditures might hamper the states' capacity to invest in productive sectors like infrastructure.

“States need to contain and rationalize their subsidy outgoes, so that such spending does not crowd out more productive expenditure,” the report emphasized.

While the report acknowledged a rise in capital expenditure from 2.4% of GDP in 2021-22 to a projected 3.1% in 2024-25, the underlying issues of poor civic management remain unaddressed. Pai’s comment underscores the disconnect between government spending priorities and everyday urban challenges, such as unclean streets and inadequate footpaths.

The financial health of state-owned electricity distribution companies (DISCOMs) also remains a significant strain. Despite restructuring efforts, DISCOM debt continues to rise, reaching Rs 6.8 lakh crore in 2022-23.