The Boston Consulting Group (BCG) has been hired by the Karnataka government to improve its financial health. The BCG's goals include increasing tax and non-tax revenues, cutting costs, looking into new funding sources, encouraging public-private partnerships, using technology to seal financial leaks and monetizing state assets. This six-month consultancy service will cost the government approximately $1.1 million. Despite BCG's involvement, the review does not explicitly address the state's expansive subsidies and freebies, which played a significant role in the Congress party's electoral success against the BJP. The increasing burden of these financial promises has necessitated a reappraisal of state finances.
The decision to hire BCG has drawn criticism from various quarters, including Congress leader Praveen Chakravarthy, who opposes outsourcing financial management even temporarily. The BJP has also criticized the move, despite its history of using foreign consultants for endorsements. Critics argue that subsidies should be targeted at the poor, citing schemes like the Pradhan Mantri Awaaz Yojana. They highlight the limited fiscal autonomy of Indian states, with GST subsuming most indirect taxes. The consultancy may recommend unpopular measures such as reducing government employees and discontinuing certain subsidies, though the taxation of agricultural income remains a contentious issue.
