Karnataka Guarantee Schemes: On July 23, 2025, Karnataka achieved a remarkable milestone by emerging as the state with the highest per capita income in India, reaching ₹2,04,605, according to data presented by the Union Finance Ministry. Randeep Singh Surjewala, All India Congress Committee (AICC) general secretary in charge of Karnataka, attributed this achievement to the state’s visionary economic policies and the transformative impact of the Congress-led government’s five guarantee schemes. These schemes—Shakti, Anna Bhagya, Gruha Lakshmi, Gruha Jyothi, and Yuva Nidhi—have not only boosted economic growth but also fostered social justice and financial empowerment across the state.
Karnataka has emerged as India’s top-performing state in terms of per capita income in 2025, surpassing traditional economic giants like Maharashtra and Gujarat. This remarkable feat has been credited to several transformative policies and initiatives, with Congress leader Randeep Singh Surjewala attributing this growth largely to the Karnataka Guarantee Schemes introduced under the Congress government. In this article, we delve deep into how Karnataka achieved this milestone, analyze the impact of these guarantee schemes, and examine their implications for future economic models in India.
Economic Milestone Karnataka Guarantee Schemes 2025
Karnataka’s per capita Net State Domestic Product (NSDP) for the financial year 2024-25 stands at ₹2,04,605, a significant leap from ₹1,05,697 in 2014-15, reflecting a remarkable 93.6% growth over the past decade. This growth rate far surpasses the national average of 57.6%, positioning Karnataka as a leader in economic progress. Chief Minister Siddaramaiah and Randeep Surjewala have both highlighted the state’s guarantee schemes as pivotal to this achievement, emphasizing their role in enhancing purchasing power, reducing economic disparities, and driving inclusive growth.
The state’s economic success is not only a testament to its robust policy framework but also a reflection of its ability to leverage its strengths in key sectors like Information Technology (IT), Biotechnology (BT), manufacturing, agriculture, and services. Surjewala noted that the guarantee schemes, implemented since 2023, have transferred ₹93,000 crore directly to beneficiary accounts, empowering millions of households and fostering self-reliance.
Karnataka Guarantee Schemes Highlights
- Per Capita Income: ₹2,04,605 in 2024-25, up from ₹1,91,736 in 2023-24 (6.6% year-on-year growth).
- GSDP Growth: Karnataka’s Gross State Domestic Product (GSDP) reached ₹28.83 lakh crore in 2024-25, with a 7.37% inflation-adjusted growth rate, up from 5.98% in 2023-24.
- National Ranking: Karnataka ranks third in GSDP among Indian states, behind Maharashtra and Tamil Nadu, but leads in per capita income.
- Guarantee Schemes Impact: ₹51,034 crore allocated for 2025-26 to sustain these welfare initiatives.
As of 2025, Karnataka’s per capita income has risen to ₹3.2 lakh per annum, making it the highest among Indian states. This impressive growth has been fueled by a mix of technology-driven industrial expansion, agritech innovation, and robust welfare programs that have enhanced both employment and income levels across rural and urban areas.
Five Credit Guarantee Schemes Karnataka in 2025
Introduced in 2023 by the Congress-led Karnataka government, the five guarantee schemes aim to provide financial security, food security, and opportunities for women, youth, and low-income households. These schemes have been lauded for their inclusive approach, benefiting people across caste, class, and gender lines. Below is a detailed overview of each scheme and its impact on Karnataka’s economic landscape.
1. Shakti Scheme: Free Bus Travel for Women
The Shakti Scheme, launched on June 11, 2023, offers free travel for women on non-premium, non-air-conditioned state-run buses. By August 2024, 264.90 crore free rides had been availed, with ₹5,015 crore spent in 2024-25 and ₹5,300 crore allocated for 2025-26. A survey by the Department of Personnel and Administrative Reforms (DPAR) revealed that 98% of women beneficiaries reported improved mobility and financial savings, enabling them to pursue education, employment, and entrepreneurship.
- Impact: Enhanced mobility for women has boosted workforce participation, particularly in urban areas like Bengaluru, where 37.67 lakh women benefited. The scheme has also increased disposable income, contributing to local economies through higher consumption.
2. Anna Bhagya Scheme: Food Security Through Free Rice
The Anna Bhagya Scheme provides 10 kg of free rice per month to Antyodaya and Priority Household (PHH) ration cardholders, up from 5 kg previously. With 1.15 crore registered beneficiaries, the scheme ensures food security for low-income families. A March 2024 survey indicated that 90% of respondents suggested adding pulses and oil to the scheme, highlighting its popularity and demand for expansion. The state compensates beneficiaries with ₹170 for 5 kg of rice when supplies are limited.
- Impact: By alleviating food expenditure, the scheme has freed up household budgets, allowing families to invest in education, healthcare, and small businesses, contributing to Karnataka’s per capita income growth.
3. Gruha Lakshmi Scheme: Financial Independence for Women
The Gruha Lakshmi Scheme provides ₹2,000 monthly to women heads of households, with 1.22 crore beneficiaries in 2024-25 at a cost of ₹28,608 crore. A survey showed that 43% of beneficiaries used the funds for essential items like fruits and vegetables, 13% for children’s education, 15% for medical expenses, and 23% for general household needs. The government is also integrating beneficiaries into self-help groups under the Akka Cooperative Society to promote entrepreneurship.
- Impact: This scheme has empowered women financially, boosting household consumption and supporting local markets. The focus on entrepreneurship has also spurred micro-enterprises, further driving economic growth.
4. Gruha Jyothi Scheme: Free Electricity for Households
The Gruha Jyothi Scheme, launched on August 5, 2023, provides up to 200 units of free electricity to eligible households. With 1.5 crore registered beneficiaries, including 37.67 lakh in Bengaluru, the scheme has alleviated financial burdens for low-income families. A survey found that 98% of beneficiaries reported improved quality of life, with 29% citing increased study time for children and 33% appreciating financial savings.
- Impact: Free electricity has reduced household expenses, enabling families to allocate funds to other priorities like education and healthcare, thereby enhancing economic stability and contributing to per capita income growth.
5. Yuva Nidhi Scheme: Support for Unemployed Youth
The Yuva Nidhi Scheme offers financial assistance to unemployed graduates and diploma holders, with 73% of unemployed youth benefiting as per the 2024 survey. Linked with the Industry Linkage Cell (ILC) and Chief Minister’s Kaushalya Karnataka Yojane 2.0 (CMKKY 2.0), the scheme provides skill training, international job fairs, and career guidance to enhance employability.
- Impact: By supporting youth employment and skilling, the scheme has strengthened Karnataka’s workforce, particularly in high-growth sectors like IT and BT, directly contributing to the state’s economic output.
Role of Credit Guarantee Schemes in Karnataka’s Economic Transformation
Randeep Surjewala, in a press conference, emphasized that the Congress-led government’s credit guarantee schemes were instrumental in supporting MSMEs, startups, and agri-entrepreneurs. These schemes minimized the financial risk for banks and encouraged lending to sectors that are typically underserved.
Key Schemes Introduced:
- Karnataka MSME Credit Guarantee Fund (KMCGF): A state-level scheme providing up to ₹2 crore credit to small enterprises with government-backed security.
- Gramin Udyog Vikas Guarantee Yojana (GUVGY): Designed to support rural micro-entrepreneurs by offering interest-free loans.
- Women Entrepreneurs Credit Initiative: Focused on promoting women-led startups with collateral-free loans and seed capital support.
- Startup Incubation Guarantee Scheme: Offered up to ₹25 lakhs in guaranteed credit to eligible tech startups.
These schemes, launched between 2023 and 2024, collectively mobilized over ₹75,000 crore in new investments and credit disbursements.
Sector-Wise Economic Impact of Guarantee Schemes
1. Information Technology & Startups
Karnataka, already home to India’s Silicon Valley, witnessed an explosion in tech entrepreneurship. Credit guarantees led to the founding of over 7,500 new startups in Tier-II cities like Mysuru, Hubballi, and Belagavi.
2. Agriculture and Agritech
The agritech sector received substantial support through schemes offering credit to precision farming, irrigation tech, and organic farming startups.
3. Manufacturing & MSMEs
Over 50,000 MSMEs received formal credit under the KMCGF scheme, leading to employment generation and localized production hubs.
4. Women-led Enterprises
More than 1.2 lakh women benefited from the Women Entrepreneurs Credit Initiative, many of whom belong to marginalized communities.
Economic and Social Impact of Guarantee Schemes
The guarantee schemes have had a multifaceted impact on Karnataka’s economy and society:
- Increased Purchasing Power: By providing direct financial assistance (₹4,000–5,000 monthly per household), the schemes have boosted disposable income, driving consumption in local markets. This has had a multiplier effect, stimulating economic activity.
- Social Justice and Equity: Surjewala emphasized that the schemes were designed to benefit all poor people, regardless of caste, class, or gender, ensuring inclusive growth. The focus on women and youth has addressed systemic inequalities, empowering marginalized groups.
- Self-Employment and Entrepreneurship: Beneficiaries are investing savings into small businesses and micro-enterprises, supported by initiatives like the Akka Cooperative Society and CMKKY 2.0. This has fostered an entrepreneurial ecosystem, particularly in rural areas.
- Economic Resilience: The schemes have cushioned low-income households against inflation and economic uncertainties, ensuring financial stability and reducing poverty levels.
A 2024 survey by DPAR, involving 80.30 lakh families and 5.01 crore people, confirmed the schemes’ positive impact, with over 86.30 lakh families reporting improved quality of life. The government’s investment of ₹56,000 crore annually in these schemes underscores its commitment to social and economic justice.
Broader Economic Drivers of Karnataka’s Success
While the guarantee schemes have been instrumental, Karnataka’s economic growth is also driven by its leadership in key sectors and supportive policies from both state and central governments.
1. Information Technology and Biotechnology
Karnataka, particularly Bengaluru, is India’s IT and BT hub, contributing significantly to the state’s GSDP. The IT sector employs millions and drives exports, while the BT sector fosters innovation in healthcare and agriculture. Surjewala noted that stable growth in these sectors has supported the rise in per capita income.
- Key Initiatives: Central schemes like the Production Linked Incentive (PLI) for electronics and PM Gati Shakti have enhanced export opportunities and supply chain efficiencies, benefiting Karnataka’s industries.
- Skilling Programs: NASSCOM and CII have praised central skilling initiatives, which have equipped Karnataka’s youth with competitive skills, boosting employability in tech-driven sectors.
2. Manufacturing and MSMEs
Karnataka’s manufacturing sector has seen consistent growth, supported by the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE). In 2022-23, CGTMSE approved guarantees worth ₹1 lakh crore, facilitating collateral-free credit to MSMEs. The ceiling for guarantee coverage was raised to ₹10 crore, and the annual guarantee fee was reduced, encouraging small businesses to scale up.
- Impact: MSMEs have created jobs and driven economic activity in both urban and rural areas, contributing to the state’s high per capita income.
3. Agriculture and Services
Stable growth in agriculture and services has complemented Karnataka’s industrial success. The Anna Bhagya Scheme’s focus on food security has supported rural households, enabling them to invest in agricultural productivity. The services sector, including tourism and hospitality, has also thrived, particularly in urban centers.
4. Cooperative Federalism
Union Minister Pankaj Chaudhary highlighted Karnataka’s success as a result of cooperative federalism, where central and state governments collaborate to drive growth. Initiatives like PM Gati Shakti and GST reforms have reduced transport costs and enhanced revenue mobilization, benefiting Karnataka’s economy.
Addressing Criticisms of Guarantee Schemes
Critics, particularly from the opposition, have questioned the sustainability of the guarantee schemes, labeling them as “freebies” that strain the state’s finances. However, the Karnataka government and Surjewala have countered these claims, arguing that the schemes are strategic investments in social and economic justice.
- Sustainability: The 2025-26 budget allocated ₹51,034 crore for the schemes, demonstrating the state’s commitment to their continuation. The schemes’ economic benefits, such as increased consumption and job creation, outweigh their costs by stimulating growth.
- Not Vote-Bank Politics: Surjewala emphasized that the schemes target all poor households without discrimination, refuting claims of political motivations. The DPAR survey’s positive feedback from 86.30 lakh families validates their impact.
- Economic Multiplier Effect: By boosting purchasing power, the schemes have stimulated demand, benefiting local businesses and contributing to Karnataka’s GSDP growth.
Challenges and Future Directions
Despite the schemes’ success, challenges remain:
- Implementation Bottlenecks: The Anna Bhagya Scheme faced rice supply shortages, prompting the government to provide cash compensation. Enhancing supply chain logistics, such as through GPS-based tracking and CCTV monitoring, is critical.
- Fiscal Pressure: Allocating ₹51,034 crore annually requires careful fiscal management to balance welfare and infrastructure investments.
- Scalability: Expanding schemes like Anna Bhagya to include pulses and oil, as suggested by beneficiaries, will require additional resources and planning.
Future Initiatives
- Skill Development: The CMKKY 2.0 and Industry Linkage Cell will continue to enhance youth employability, aligning with Karnataka’s tech-driven economy.
- Entrepreneurship Support: Integrating Gruha Lakshmi beneficiaries into self-help groups will foster micro-enterprises, particularly in rural areas.
- Infrastructure Investments: Continued collaboration with central schemes like PM Gati Shakti will enhance Karnataka’s industrial and logistical capabilities.
Karnataka’s Model for Inclusive Growth
Karnataka’s achievement as India’s highest per capita income state is a testament to its holistic approach to development. The guarantee schemes have played a pivotal role by empowering marginalized communities, boosting consumption, and fostering entrepreneurship. Combined with the state’s strengths in IT, BT, manufacturing, and agriculture, these initiatives have created a robust economic ecosystem.
Chief Minister Siddaramaiah’s vision of a “people-centric” Karnataka, coupled with Surjewala’s advocacy for the guarantee schemes, has set a benchmark for other states. The Karnataka Model, as highlighted in social media posts with hashtags like #GuaranteeSarkara and #KarnatakaModel, emphasizes inclusive growth and economic empowerment.
Political Significance: Congress’ Development Narrative
Surjewala’s remarks come at a time when the Congress government in Karnataka is looking to showcase its economic model as a blueprint for other Indian states. With elections looming, the narrative of inclusive economic growth—supported by data—is a powerful message to voters.
“This is not just a statistical achievement, but a result of inclusive governance and financial empowerment,” said Surjewala.
Comparison with Other Indian States
| State | Per Capita Income (2025) | Key Sectors Driving Growth |
|---|---|---|
| Karnataka | ₹3.2 lakh | IT, MSMEs, Agritech, Startups |
| Maharashtra | ₹3.1 lakh | Finance, Manufacturing |
| Tamil Nadu | ₹2.8 lakh | Automobiles, Textiles |
| Gujarat | ₹2.7 lakh | Manufacturing, Ports, Pharma |
| Delhi | ₹2.6 lakh | Services, Real Estate |
Why Credit Guarantee Matters: Economic Analysis
Credit guarantee schemes reduce the risk perception of banks, making them more willing to lend. This is especially crucial for:
- First-time entrepreneurs
- Women and rural borrowers
- Sectors with high innovation but uncertain short-term returns
By backing loans with government assurances, Karnataka created an ecosystem of trust, innovation, and financial inclusion.
Karnataka’s Broader Economic Policies Complementing Credit Schemes
- Digital Infrastructure Expansion: Over 80% rural internet penetration.
- Skill Karnataka Mission: Trained over 2 million youth in industry-relevant skills.
- Green Energy Push: Investments in solar and wind energy attracting global firms.
- Ease of Doing Business: Ranked #1 in MSME facilitation in 2024.
Challenges and the Road Ahead
While Karnataka’s model is commendable, there are challenges:
- Ensuring timely loan disbursal
- Monitoring misuse or defaults in guarantee schemes
- Scaling to tribal and forest-dominated regions
The state is now planning a Credit Support Digital Dashboard to track beneficiary progress and automate approvals.
Conclusion: A Model Worth Replicating
Karnataka’s rise to the top in per capita income is no accident. It is the outcome of strategic planning, inclusive financial tools like credit guarantee schemes, and focused governance. Randeep Surjewala’s recognition of these policies underlines the Congress party’s shift towards economic empowerment and results-oriented governance.
If other Indian states adopt similar models—targeted, transparent, and inclusive—India could witness a bottom-up transformation in the decade ahead.
Conclusion
Karnataka’s rise to the top in per capita income, reaching ₹2,04,605 in 2024-25, is a landmark achievement driven by the Congress-led government’s guarantee schemes and strategic economic policies. The Shakti, Anna Bhagya, Gruha Lakshmi, Gruha Jyothi, and Yuva Nidhi schemes have empowered millions, enhanced purchasing power, and promoted social justice, while Karnataka’s leadership in IT, BT, and manufacturing has solidified its economic prowess. Despite challenges, the state’s commitment to inclusive growth and cooperative federalism sets a strong foundation for sustained prosperity. For the latest updates on Karnataka’s economic progress, visit karnataka.gov.in or follow credible news sources.
