With an outlay of ₹4,09,549 crore, Karnataka Budget 2025-2026 struck a delicate balance between social welfare measures and heavier capital investment for infrastructure and development. Siddaramaiah made it a point to highlight the financial loss Karnataka has faced due to Centre’s reluctance in releasing funds, hoarding cess and surcharge, and reduced devolution.
Published Mar 07, 2025 | 4:12 PM ⚊ Updated Mar 07, 2025 | 4:12 PM
Karnataka Chief Minister Siddaramaiah presenting the Budget 2025-26 in the state legislative Assembly on Friday, 7 March.
Synopsis: With a focus on six key developmental dimensions, Karnataka Chief Minister Siddaramaiah presented his 16th Budget on Friday, 7 March. Despite criticism from the Opposition and within his government, Siddaramaiah stuck to his guns on the Congress party’s guarantees and welfare schemes in a confident display of his socialist ideals.
With a size of ₹4,09,549 crore, Siddaramaiah said his Budget’s focus was on welfare programmes, agriculture and rural development, development-oriented initiatives, urban development, investment and job creation, and governance reforms.
“In addition to these initiatives, we will prioritise new strategies to eliminate regional disparities, strengthen education and health sectors, ensure an efficient transport system, and maintain law and order. This Budget emphasises empowering the helpless through welfare departments,” Siddaramaiah said in his speech.
Contributing 8.4 percent to the national GDP, Karnataka is among the fastest growing states, Siddaramaiah said. In 2024-2025, Karnataka is expected to achieve a GSDP growth rate of 7.4 percent, higher than the national average of 6.4 percent.
The agriculture sector has registered a positive growth of 4 percent in 2024-25, and the Budget has allocated a total of ₹51,339 crore. The state government has launched a new Industrial Policy 2025-30, aiming to achieve a 12 percent industrial growth and the creation of 20 lakh jobs by 2030. The industrial sector has achieved 5.8 percent growth.
The service sector is now the dominant component of the economy of Karnataka. The service sector’s share in the economy is 66 percent in terms of gross value addition. The sector has achieved an impressive growth rate of 8.9 percent in the year 2024-25, exceeding the national average growth rate of 7.2 percent.
Siddaramaiah highlighted the declining share of revenues from Karnataka from taxation. He pointed to two primary reasons: Centre’s hoarding of cess and surcharges and reduced devolution from central pool of taxes set by 15th Finance Commission (FC).
“Karnataka’s share of tax devolution in the divisible pool was reduced to 3.647 percent in the 15th FC period compared to 4.713 percent in the 14th FC. This is a decline of 23 percent in devolution, translating into an estimated loss in revenue of ₹12,000 crores per year. The 15th Finance Commission had recommended a special grant of ₹5,495 crore to the state for reduction in the state’s share in devolution, along with a special grant of ₹3,000 crore for lake development in Bengaluru and ₹3,000 crore for the development of the Peripheral Ring Road, totalling ₹11,495 crore in its report. But the central government has not released any of these grants to the state. Further, in the Union Budget for the year 2023-24, ₹5,300 crore was announced for the Upper Bhadra Irrigation Project. However, the central government has not released any grant so far,” Siddaramaiah said.
The BJP accused Siddaramaiah of resorting to blaming the Centre for Karnataka’s precarious fiscal state.
The Budget, however, adhered to all norms of the Fiscal Responsibility Act. For the financial year 2025-26, the revenue deficit is estimated to be ₹19,262 crore, which is 0.63 percent of the GSDP.
Fiscal deficit is estimated to be ₹90,428 crore, which is 2.95 percent of the GSDP. Total liabilities at the end of 2025-26 is estimated to be ₹7,64,655 crore, which is 24.91 percent of the GSDP.
“By keeping fiscal deficit and total outstanding liabilities within the limits mandated under the Karnataka Fiscal Responsibility Act, we have maintained fiscal discipline in the financial year 2025-26,” Siddaramaiah pointed out.
Total expenditure for 2025-26 is estimated to be ₹4,09,549 crore. It includes revenue expenditure of ₹3,11,739 crore, capital expenditure of ₹71,336 crore and loan repayment of ₹26,474 crore.
The six poll guarantees of the Congress have been mocked by the Opposition, criticised by Congress’s own leaders and defamed as “freebies” by many including Prime Minister Narendra Modi.
Siddaramaiah countered the criticism with principles of equality and socialism. “The principle of the beast, ‘Survival of the Fittest’ is often referred to as ‘Social Darwinism. ’ Contrary to this, Babasaheb Dr BR Ambedkar framed our Constitution to build a nation founded with the hope of an equal society built on the foundation of humanity”, he said, insisting that they weren’t freebies but “strategic investments made on economic and social principles”.
The Budget saw allocation for and emphasis on vulnerable groups, including scheduled castes and scheduled tribes, gender minorities, children, religious minorities, and economically backward classes across sectors — from financial assistance to aid entrepreneurship to scholarships to pursue higher education.
In the year 2025-26, a total of ₹42,018 crore has been provided under the Karnataka Scheduled Castes Sub-Plan and Tribal Sub-Plan, including ₹29,992 for the Scheduled Caste Sub-Plan and ₹12,026 crore for the Tribal Sub-Plan.
This comes at a time when the Congress government has been facing Opposition ire for planning to divert SC/ST sub-plan funds to foot guarantees to select sections. The BJP, when in power, had resorted to the same tactic for projects, dipping into SC/ST sub-plan funds.
Under the provisions of Karnataka Transparency in Public Procurement Act, contractors from SC/ST Category-I, Category-IIA and Category-IIB already get reservation in government tenders. Karnataka Budget 2025-2026 has increased the value of work to ₹2 crore.
Under the same act, reservation will be provided in the procurement of goods and services under various government departments, corporations, and institutions to suppliers belonging to the scheduled caste, scheduled tribe, Category-I, Category-IIA, and Category-IIB up to ₹1 crore.
The BJP has accused the Budget of being a “minority appeasement Budget”, and “halal Budget” since Muslims falls under the Category II-B of Karnataka’s reservation list. The above scheme however, applies to SCs/STs, 95 percent of Backward classes (BCs) under Category- I, 105 Other Backward Classes (OBCs) under Category II-A.
BJP state president BY Vijayendra termed the Budget “A Congress blueprint for appeasement, not progress”.
In a X post, he said the government prioritised appeasement over real development. He listed ₹500 crore allocation for Moulana Azad schools, special business schemes for minorities, while ignoring under-funded government schools, MSMEs and rural entrepreneurs.
He said vote-bank politics took center stage as the government sidelined job creation, skill development, and education. “₹1.16 crore borrowed, ₹90,428 crore fiscal deficit and yet, Congress spends on selective appeasement instead of empowering all,” Vijayendra said.
The BJP leader also accused the government of betraying Karnataka’s future. “Where is the budget for real growth? Farmers, youth and rural Karnataka are left behind while the Congress focuses only on its vote bank. This is not governance, this is a betrayal of Karnataka’s future,” he tweeted.
Deputy Chief Minister DK Shivakumar’s pet project – Brand Bengaluru – found generous mention in the Budget. An amount of ₹1,800 crore has been set aside for 21 schemes during the FY 2024-25 under Brand Bengaluru.
A ‘Comprehensive Health Programme’ at a cost of ₹413 crore has been announced. Financial assistance of ₹3,000 crore to BWSSB and BBMP has been announced for STPs and drain networks to control flooding. The yearly grant to Bengaluru has been enhanced from ₹3,000 crore to ₹7,000 crore in the Budget.
Bengaluru’s infamous traffic didn’t miss the Budget bus. Several projects, including flyovers, roads, and metro rail extensions, have been announced. Airports in Vijayapura, Raichur, Karwar, and Mysuru found mention and grants in the Budget.
Several railway projects in partnership with state government found allocations. The Bengaluru Suburban Railway Project is being implemented at a cost of ₹15,767 crore. The project consists of a 148 km length of rail network and 58 railway stations. Work on two of the four corridors is in progress. The tender process for the remaining two corridors will be completed, and the project will be implemented in a time-bound manner, Siddaramaiah claimed in the Budget speech.
The state also took great pride in eliminating the Naxal movement with the recent surrender of armed left-wing extremists. The anti-Naxal squad will, hence, be disbanded, Siddaramaiah said.
