3 months ago
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Karnataka Chief Minister Siddaramaiah presented the State Budget for 2026-27 with a full outlay of ₹4,48,004 crore, a 13.3% summation compared to the Revised Estimates for 2025-26, pegged astatine ₹3,95,307 crore. This was contempt concerns implicit a autumn successful Goods and Services Tax (GST) gross owed to rate rationalisation, which seems to person been countered by an summation successful the State’s stock of the taxation devolution pool, arsenic per recommendations of the 16th Finance Commission.
The Budget adheres to the norms of Karnataka Fiscal Responsibility Act, 2000, though precise adjacent to the precocious limits. The fiscal shortage stands astatine ₹97,449 Crore, 2.95% of GSDP, arsenic against the bounds of 3% and the full liabilities of the authorities stands astatine ₹8,24,389 Crore, 24.94% of the GSDP, arsenic against the bounds of 25%. The fund pegs the borrowing this twelvemonth unsocial astatine ₹1.32 Lakh Crore.
Revenue deficit
Karnataka continues to contiguous gross shortage budgets for consecutive years now. This twelvemonth it is pegged astatine ₹22,957 Crore, up from ₹19,262 Crore past twelvemonth arsenic per fund estimates. While the full gross receipts of the authorities is estimated to beryllium ₹3,15,050 Crore, gross expenditure is pegged astatine ₹3,38,007 Crore. The authorities authorities is besides undertaking 1 of the largest recruitment drives to capable 56,432 posts which is expected to thrust up gross expenditure further successful coming years.
Compared to revised estimates of state’s ain taxation gross successful 2025-26 pegged astatine ₹1,93,100 Crore, the fund estimates for the aforesaid sees a hike by astir 14% and for 2026-27, it is pegged astatine ₹2,20,000 Crore.
However, the superior expenditure has accrued from ₹71,336 Crore arsenic per fund estimates of 2025-26 to ₹74,682 Crore, a specified summation of 4.6%, adjacent arsenic the fund size has accrued by implicit 13%.
Increased taxation share
Receipts from Government of India has gone up from ₹62,933 Crore successful 2025-26 to ₹79,050 Crore successful 2026-27, a whopping summation by implicit 25%. This chiefly owed to the 16th Finance Commission that recommended the state’s stock successful the divisible taxation excavation astatine 4.131%, up from 3.647% recommended by the 15th FC.
Mr. Siddaramaiah termed this a “partial redressal of the injustice caused to the State”, arsenic helium said the State expected the State’s stock to beryllium restored to 4.71% arsenic recommended by the 14th FC. He said the 16th FC had considered Karnataka’s proposition to reward fiscal show and publication to the nationalist system portion computing the taxation devolution formula. The FC has included GSDP publication to nationalist system for weightage and Mr. Siddaramaiah said this was a “directional shift”.
GST shortfall
The summation successful the State’s stock of the divisible taxation excavation seems to person cushioned the autumn successful GST gross owed to complaint rationalisation carried retired successful September, 2025. This led to a shortage of ₹10,000 Crore successful 2025-26, it is expected to beryllium astir ₹15,000 Crore successful 2026-27. While supporting complaint rationalisation successful principle, Karnataka on with 7 different states petitioned the GST Council for a robust gross extortion programme. Mr. Siddaramaiah said the State volition proceed to property for capable compensation from the Union Government for gross losses to the states implicit GST rationalisation.
State’s maturation outpaces nationalist growth
Despite a downward inclination successful GST collections, owed to complaint rationalisation - the monthly maturation complaint has fallen from 10% to astir 4% - the authorities system registered a GSDP maturation of 8.1% successful 2025-26, surpassing nationalist maturation of 7.4%. Last twelvemonth also, the State GSDP grew by 7.4% outpacing the nationalist maturation complaint of 6.4%.
While the agriculture assemblage grew by 9.1%, the concern assemblage grew by 6.7% and the services assemblage grew by 8.1% successful 2025-26. Only the services assemblage registered a slower maturation complaint - down to 8.1% compared to 8.9% successful 2024-25.
“The continued accent connected superior concern by the government, unneurotic with a revival successful backstage assemblage concern has provided important impetus to wide economical growth,” Mr. Siddaramaiah said successful his Budget speech.
Even arsenic Foreign Direct Investment (FDI) successful states similar Maharashtra, Gujarat and Delhi declined, Karnataka saw a 2.6 times summation during the archetypal fractional of 2025-26 and stood astatine 9.4 Billion USD, the fund said.
