Karnataka Chief Minister Siddaramaiah offered the State Finances for 2026-27 with a complete outlay of ₹4,48,004 crore, a 13.3% enhance in comparison with the Revised Estimates for 2025-26, pegged at ₹3,95,307 crore. This was regardless of considerations over a fall in Items and Companies Tax (GST) income as a consequence of rate rationalisation, which appears to have been countered by a rise within the State’s share of the tax devolution pool, as per suggestions of the sixteenth Finance Fee.
The Finances adheres to the norms of Karnataka Fiscal Duty Act, 2000, although very near the higher limits. The fiscal deficit stands at ₹97,449 Crore, 2.95% of GSDP, as in opposition to the restrict of three% and the overall liabilities of the state stands at ₹8,24,389 Crore, 24.94% of the GSDP, as in opposition to the restrict of 25%. The finances pegs the borrowing this 12 months alone at ₹1.32 Lakh Crore.
Income deficit
Karnataka continues to current income deficit budgets for consecutive years now. This 12 months it’s pegged at ₹22,957 Crore, up from ₹19,262 Crore final 12 months as per finances estimates. Whereas the overall income receipts of the state is estimated to be ₹3,15,050 Crore, income expenditure is pegged at ₹3,38,007 Crore. The state authorities can also be enterprise one of many largest recruitment drives to fill 56,432 posts which is anticipated to drive up income expenditure additional in coming years.
In comparison with revised estimates of state’s personal tax income in 2025-26 pegged at ₹1,93,100 Crore, the finances estimates for a similar sees a hike by almost 14% and for 2026-27, it’s pegged at ₹2,20,000 Crore.
Nonetheless, the capital expenditure has elevated from ₹71,336 Crore as per finances estimates of 2025-26 to ₹74,682 Crore, a mere enhance of 4.6%, even because the finances dimension has elevated by over 13%.
Elevated tax share
Receipts from Authorities of India has gone up from ₹62,933 Crore in 2025-26 to ₹79,050 Crore in 2026-27, a whopping enhance by over 25%. This primarily because of the sixteenth Finance Fee that really useful the state’s share within the divisible tax pool at 4.131%, up from 3.647% really useful by the fifteenth FC.
Mr. Siddaramaiah termed this a “partial redressal of the injustice brought about to the State”, as he stated the State anticipated the State’s share to be restored to 4.71% as really useful by the 14th FC. He stated the sixteenth FC had thought-about Karnataka’s suggestion to reward fiscal efficiency and contribution to the nationwide economic system whereas computing the tax devolution components. The FC has included GSDP contribution to nationwide economic system for weightage and Mr. Siddaramaiah stated this was a “directional shift”.
GST shortfall
The rise within the State’s share of the divisible tax pool appears to have cushioned the autumn in GST income as a consequence of charge rationalisation carried out in September, 2025. This led to a scarcity of ₹10,000 Crore in 2025-26, it’s anticipated to be round ₹15,000 Crore in 2026-27. Whereas supporting charge rationalisation in precept, Karnataka together with seven different states petitioned the GST Council for a strong income safety programme. Mr. Siddaramaiah stated the State will proceed to press for enough compensation from the Union Authorities for income losses to the states over GST rationalisation.
State’s development outpaces nationwide development
Regardless of a downward development in GST collections, as a consequence of charge rationalisation – the month-to-month development charge has fallen from 10% to round 4% – the state economic system registered a GSDP development of 8.1% in 2025-26, surpassing nationwide development of seven.4%. Final 12 months additionally, the State GSDP grew by 7.4% outpacing the nationwide development charge of 6.4%.
Whereas the agriculture sector grew by 9.1%, the economic sector grew by 6.7% and the providers sector grew by 8.1% in 2025-26. Solely the providers sector registered a slower development charge – down to eight.1% in comparison with 8.9% in 2024-25.
“The continued emphasis on capital funding by the federal government, along with a revival in non-public sector funding has offered vital impetus to general financial development,” Mr. Siddaramaiah stated in his Finances speech.
At the same time as International Direct Funding (FDI) in states like Maharashtra, Gujarat and Delhi declined, Karnataka noticed a 2.6 instances enhance in the course of the first half of 2025-26 and stood at 9.4 Billion USD, the finances stated.
Revealed – March 06, 2026 11:56 am IST
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