Karnataka chief minister Siddaramaiah on Friday, presenting his third consecutive budget, said that welfare schemes under the government’s guarantee program have been allocated ₹51,034 crore, with the state’s liabilities accounting for 24.91% of the Gross State Domestic Product (GSDP).
He said that the state plans to borrow ₹1.16 lakh crore, pushing Karnataka’s total liabilities to ₹7.64 lakh crore from ₹6.65 lakh crore last year.
“Karnataka is one of the fastest-growing states in India, contributing 8.4% to the National Gross Domestic Product (GDP). The state has continued its growth trajectory in 2024-25 and is poised to achieve a GSDP growth rate of 7.4%, outpacing the national growth rate of 6.4%,” Siddaramaiah said in his budget speech.
“Many of the welfare programmes we offer, including the five guarantees, are not merely freebies; I can confidently say that these are strategic investments made on economic and social principles,” he said.
The chief minister targetted the central government for failing to compensate Goods and Services Tax (GST) revenue losses, non-devolution of cesses and surcharges, and lower tax devolution, which he said exacerbated Karnataka’s fiscal challenges.
“The Union government’s failure to fully compensate for GST revenue loss, non-devolution of cesses and surcharges, and lower tax devolution has put Karnataka in a difficult position. The state has been facing revenue challenges in its pursuit of long-term growth with social justice,” he said.
Also Read:Karnataka renames Bangalore University after former PM Manmohan Singh
To counter these fiscal pressures, the chief minister called for a revision in the Centre-State revenue-sharing formula, proposing a 50% share for states in the divisible pool.
He also demanded that cesses and surcharges imposed by the Union government be capped at 5% of gross tax revenue, with any additional amount included in the divisible pool.
Revenue collection for 2025-26 has been set at ₹40,000 crore, with revised estimates for 2024-25 projecting ₹36,500 crore in excise revenue. The government plans to continue rationalising excise slabs to ensure liquor prices remain competitive with neighbouring states.
“The government has rationalised excise slabs, making premium segment prices comparable to those in neighbouring states. This process will continue with minor adjustments in the excise duty structure,” Siddaramaiah said.
To enhance revenue, unused liquor licenses will be allocated through a transparent electronic auction, and new software and online processes will be introduced for the excise department to improve efficiency and service delivery.
The budget also announced the establishment of a dedicated OTT platform for Kannada cinema that aims to provide a much-needed space for local filmmakers to reach wider audiences, responding to the growing demand for regional content in the streaming industry.
“We recognise the immense talent and potential within the Kannada film industry. This new platform will not only provide filmmakers with an avenue to showcase their creativity but also promote our cultural heritage globally,” Siddaramaiah said.
Bengaluru’s infrastructure has received a boost in the budget, with an annual grant increase from ₹3,000 crore to ₹7,000 crore. A special purpose vehicle (SPV) will be established to utilise these grants and implement priority development projects.
To address Bengaluru’s traffic congestion, the government plans to make major roads signal-free. Key initiatives include a 40.5 km double-decker flyover costing ₹8,916 crore as part of Namma Metro Phase 3, 300km of additional roads along canal buffer zones at a cost of ₹3,000 crore, upgrading 460 km of arterial and sub-arterial roads for ₹660 crore, and constructing 120km of flyovers and grade separators.
The Bengaluru Suburban Railway Project, costing ₹15,767 crore, continues its implementation, with two corridors under development. The tender process for the remaining two corridors will be completed soon to ensure timely execution.
The government has also guaranteed ₹19,000 crore to BBMP for the ₹40,000 crore North-South and East-West corridor tunnel projects.
Additionally, ₹300 crore has been earmarked for a Fund-of-Funds initiative, and ₹100 crore will be dedicated to a deep-tech development corpus.