After presenting the seventeenth state finances on March 6, Siddaramaiah, Karnataka’s longest-serving chief minister, stated, “We’ll proceed to finances until we obtain directions from the excessive command.” This got here after the top of the 77-year-old CM’s tenure was counted down within the media and following a problem from deputy chief minister DK Shivakumar.
The finances proposal is anticipated given the Congress authorities’s insurance policies, with Rs 51,286 crore of the expanded Rs 4,480-crore spending plan put aside for implementation of 5 pro-poor assure schemes that may convey the celebration to energy in 2023.
“This Funds is a dwelling doc that displays the desires and confidence of farmers, marginalized sections, staff, girls, marginalized teams, minorities, college students, youth and other people engaged in commerce and business,” Siddaramaiah stated in his speech, echoing phrases he has repeated all through his second time period.
“This 12 months’s finances has been ready with a give attention to social justice and growth throughout the state has been included within the finances,” the CM stated, highlighting the important thing facet of ‘social justice’, which is the political energy of the Karnataka Congress.
allocation
As within the earlier fiscal 12 months, the Siddaramaiah authorities has allotted Rs 28,608 crore as month-to-month subsidy of Rs 2,000 per lady per BPL family below the Gruha Lakshmi scheme (1.24 billion beneficiaries). 540 billion rupees (Rs 684 million in 2025-26) at no cost bus transport for all girls below Shakti scheme. 10,578 crore as free electrical energy to all households below Gruha Jyothi scheme (1.74 billion shoppers). 6.2 billion rupees for Annabhagya free rice and meals packet scheme for BPL households (4.54 billion beneficiaries). and Rs 600 crore for financial help program for educated unemployed youth referred to as Yuva Nidhi (Rs 3.08 billion beneficiaries in 2025-2026).
The 2026-27 finances features a income deficit of Rs 22,957 crore, which is 0.69% of the state’s GSDP and barely decrease than the latest excessive of Rs 25,549 crore (0.81%) of the earlier 12 months. The state’s borrowing is estimated to succeed in an all-time excessive of Rs 1.32 billion within the subsequent monetary 12 months, in comparison with Rs 1.16 billion in 2025-26. The borrowing is inside fiscal self-discipline, with complete borrowing amounting to Rs 8.24 billion, which is 24.94% of state GSDP, simply in need of 25% of fiscal self-discipline.
The federal government’s elevated borrowing in the established order finances is seen as an effort to stability massive outflows to politically-driven assure schemes alongside the urgency of funding infrastructure and growth, particularly as it’s below fixed stress to entry discretionary funds for civil contracts from its 138 MLAs within the 224-member Home of Commons.
The federal government has up to now defined that every meeting constituency receives an revenue of Rs 233 crore from the federal government assure scheme alone, however this isn’t passable to the MLAs who’ve caught to the celebration line even because the CM himself is battling Shivakumar to retain energy.
Though the state has been experiencing wholesome financial progress, pushed primarily by FDI ($9.4 billion within the first half of 2025-26), there are issues that final 12 months’s income targets haven’t been met. “The state financial system recorded a excessive actual GDP progress charge of 8.1 per cent in fixed costs throughout 2025-2026, increased than the nationwide progress charge of seven.4 per cent throughout the identical interval,” Siddaramaiah stated in his deal with.
The agricultural sector contributing 10.77% to GSDP recorded a sturdy progress of 9.1% “supported by improved monsoon circumstances”, the commercial sector contributing 19.36% grew by 6.7% and the companies sector accounting for 69.87% share of GSDP recorded a progress of 8.1%.
lack of revenue
Nevertheless, the federal government is witnessing a income shortfall of practically Rs 15,000 crore within the present monetary 12 months (7% under finances estimates) throughout state-specific tax areas akin to state GST/industrial tax, excise tax, actual property and car registration. As towards the anticipated income of Rs 2.08 billion for the present fiscal 12 months, the revised forecast for 2025-2026 exhibits that the state will generate solely Rs 1.93 billion by itself income.
Industrial tax (state GST), which accounts for the most important portion of the state’s personal income, has come all the way down to Rs 1.1 billion within the revised estimates, in comparison with the finances estimate of Rs 1.2 billion for 2025-2026. The excise tax within the state is Rs 41,000 crore towards an estimated Rs 42,000 crore, and the registration price is Rs 25,000 crore as a substitute of Rs 28,000 crore.
Regardless of curbs on tax assortment from states’ personal sources, the federal government tasks a big enchancment in tax assortment in 2026-27 to Rs 220,000 crore in comparison with Rs 1,930,000 crore within the present monetary 12 months, an estimated 14 per cent income improve regardless of a 7 per cent drop.
“Regardless of the structural challenges posed by modifications in tax coverage by the federal authorities, states’ personal income collections have proven resilience, supported by efficient useful resource mobilization measures undertaken by state governments,” Siddaramaiah stated.
political backlash
The political confrontation because the presentation of the finances has revolved across the state’s growing debt burden, together with a brinkmanship of a complete debt of 24.94% of the state’s GDP and a finances deficit of two.95% (exterior margin of three%).
“Within the final three years alone, the federal government has incurred a debt of Rs 4.39 billion. The state of affairs has reached a stage the place will probably be troublesome to even repay the curiosity on this debt,” stated R Ashoka, Chief of Opposition within the Bharatiya Janata Celebration.
“The nation’s debt presently stands at Rs 8.24 billion. We’ve taken recent loans of Rs 1.32 billion this 12 months. The place does the cash from such loans go? No capital expenditure is being performed, no authorities property are being constructed. So, what are we doing with all of the mortgage cash?” requested Union minister HD Kumaraswamy, chief of the Janata Dal (Secular).
Siddaramaiah defended himself by pointing to the Union authorities’s borrowings as GST collections weaken. He additionally blamed the central authorities’s failure to cowl the Rs 10,000,000-crore GST loss after final 12 months’s tax charge hikes on weakening states’ personal income techniques.
“Prime Minister Modi has given out loans of Rs 165 crore since he got here to energy, which is 55.6 per cent (of GDP) as per the (Fiscal Duty Act). India’s fiscal deficit is 4.4 per cent, whereas Karnataka’s fiscal deficit is 2.95 per cent, which is throughout the authorized restrict of three per cent of GDP,” Siddaramaiah stated.
“The fiscal burden on states is growing as a result of the central authorities isn’t giving them their fair proportion of the subsidies they need to obtain,” he stated. “Regardless of the non-cooperation of the Union authorities, we now have maintained fiscal self-discipline whereas attaining financial progress. This displays our accountable governance,” the Karnataka CM stated in his finances speech.
Siddaramaiah made a particular point out of the Rs 69,488-crore works below the Jal Jeevan Mission Scheme, however stated the Heart had “launched solely Rs 11,786-crore” below it, whereas states had launched Rs 27,098-crore out of their Rs 38,600-crore share.
“Regardless of us working past our capability for the event of our state, the Union authorities continues to deal with our state unfairly by ignoring the precept of cooperative federalism within the Structure,” the CM stated.
