Chief Minister Siddaramaiah on Friday, March 7, presented his 16th budget – the most by anyone in the history of the state – with an outlay of over four lakh crore rupees. During his speech, he not only defended the five guarantees, but also went on the offensive against the Union government, accusing it of discriminating against the state. Siddaramaiah, who underwent a knee surgery last month, read most of the budget speech while seated.
The CM said that the budget, with an outlay of Rs 4,09,549 crore, was a fiscally responsible budget, with borrowings and total liabilities well within the limits mandated by the Karnataka Fiscal Responsibility Act 2002. Borrowings amount to Rs 1,16,000 crore and the fiscal deficit is Rs 90,428, which is 2.95% of the Gross State Domestic Product (GSDP). The revenue deficit is estimated at Rs 19,262 crore, which is 0.63 of GSDP.
For revenue generation, the budget proposes to raise an estimated Rs 1,20,000 crore from commercial taxes, Rs 40,000 crore from the Excise Department, Rs 28,000 crore from Stamps and Registration, Rs 15,000 crore from the Transport Department, and Rs 12,000 crore in royalties and taxes from the Mines and Geology Department in 2025-26.
Siddaramaiah said central transfers to the state had “suffered a severe decline” after the implementation of the 15th Finance Commission devolution formula and that Karnataka had seen a 23% decline, which was the “sharpest” in the share awarded by the 15th Finance Commission—an estimated loss of Rs 12,000 crore per year in revenue.
Siddaramaiah said that the state’s economy was strong and had outpaced India’s overall growth rate in 2024-25. He said that Karnataka’s contribution to national GDP was 8.4%. The GSDP in 2024-25 is expected to be 7.4%, higher than the national GDP of 6.4%, he said.
Siddaramaiah said that Karnataka had proposed that the share of the states should be at least 50% of the divisible pool. “This will ensure a fair allocation of resources between the centre and the state. The cesses and surcharges imposed by the Union should be capped at 5% of gross tax revenue and anything exceeding that should be a part of the divisible pool.” He also called for a state to receive 60% of its contribution to the divisible pool.
Defending the guarantees, which his own Cabinet colleagues have criticised of late, Siddaramaiah said that they were not “merely freebies.” “I can confidently say that these are strategic investments made on economic and social principles.”
He also quoted the late scholar Muzaffar Assadi, who said that “behind the guarantee schemes lie the suffering of the poor, the violence of poverty, the struggles of women, and the vision of an unequal India.”
Siddaramaiah said that the state government’s schemes were “emphatic answers to many social and economic questions raised by various international forums. We have launched welfare programs with the aim of increasing people's purchasing power.”
The 2025-26 budget allocated Rs 51,070 crore towards the five guarantees, slightly lower than the Rs 53,674 crore allocated during the previous financial year.
The opposition BJP criticised the budget, saying that it was an “anti-people” budget that imposed a financial burden on people.
“The state budget presented today by Chief Minister Siddaramaiah is extremely disappointing, development-deficient, lacking vision, and merely a superficial budget,” said Leader of the Opposition R Ashoka.
He said that only 62% of the budget had been spent during 10 months of the previous fiscal year. “When the previous year’s money has not been spent, what is the use of presenting a new budget? What is the use of making a child who has failed the Class 5 exam give the exam for Class 6? This is the situation with Siddaramaiah’s budget,” Ashoka said.
Addressing a press conference after the budget speech, Siddaramaiah dismissed claims that he had brought the state to financial ruin. He said that the state’s finances were well within the limits prescribed by the Karnataka Fiscal Responsibility Act 2002.