4 months ago
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As Karnataka gears up for its 2026-27 Budget, Chief Minister Siddaramaiah faces the challenging task of addressing the State’s widening fiscal pressures.
The State is grappling with a projected gross shortage of ₹19,262 crore successful the existent 2025-26 fiscal year, a fig that could emergence further owed to caller GST complaint rationalisation and different factors.
The fiscal shortage for 2025-26 stands estimated astatine ₹90,428 crore, equivalent to 2.95% of the Gross State Domestic Product (GSDP), staying conscionable wrong the 3% bounds prescribed nether the Karnataka Fiscal Responsibility Act. To span the spread betwixt gross inflows and outflows, the authorities indispensable research measures to curb spending successful non-essential areas portion boosting gross done enhanced taxation collection, caller cesses, oregon different levies.
The upcoming Union Budget on February 1, 2026, is expected to connection immoderate clarity connected cardinal transfers and grants to the State, which could power Karnataka’s fiscal planning.
In the 2025-26 Budget, gross expenditure was pegged astatine astir ₹3.11 lakh crore, against gross receipts of astir ₹2.92 lakh crore, wrong an wide Budget outlay of ₹4.09 lakh crore. However, ongoing challenges, including GST complaint restructuring, person led to an anticipated further gross shortfall of astir ₹9,000 crore this year, compounded by astir ₹9,500 crore mislaid from the non-sharing of definite cesses by the Centre.
More borrowing
Credit standing agency ICRA has highlighted the State’s assertive borrowing strategy, noting that Karnataka plans to rise a grounds ₹93,000 crore from the unfastened marketplace successful the last 4th of 2025-26 — the highest quarterly borrowing ever by the State.
This magnitude is astir treble what the State raised successful the aforesaid 4th of the erstwhile 2 fiscal years and exceeds the full-year borrowings successful those periods. So far, lone ₹12,000 crore has been borrowed done December.
Overall borrowings for 2025-26 are budgeted astatine ₹1,16,000 crore, representing astir 28% of the full fund size.
Leader of the Opposition R. Ashok has criticised the Congress-led government, dubbing Siddaramaiah the “Biggest Borrowing CM” amid concerns implicit rising indebtedness levels.
‘Deliberate move’
According to the Chief Minister’s economical advisor and Congress MLA Basavaraj Rayareddy, the determination to front-load borrowings toward the extremity of the fiscal twelvemonth is simply a deliberate determination to minimise the involvement load connected the State exchequer.
With payment commitments, warrant schemes, and different expenditures continuing to exert pressure, the upcoming Budget preparations would necessitate cautious balancing to support fiscal subject portion sustaining maturation and improvement priorities.
