Karnataka Chief Minister Siddaramaiah on Thursday presented the state budget for the financial year 2025-26 in the Legislative Assembly, allocating Rs 51,034 crore for the implementation of various guarantee schemes.
The budget, while maintaining fiscal prudence, also earmarked Rs 51,339 crore for the agriculture sector, marking a significant increase from last year’s Rs 44,000 crore.
Emphasising the government’s commitment to fiscal discipline, Siddaramaiah highlighted that the administration had managed these guarantees while adhering to the fiscal deficit norm of 3 per cent of the Gross State Domestic Product (GSDP) and maintaining a debt-to-GSDP ratio of 25 per cent over the past two budgets.
Agriculture rebounds, industrial growth strengthened
The agricultural sector, which had witnessed a negative growth rate of -4.9 per cent in the previous year, recorded a recovery with 4 per cent growth in 2024-25, surpassing the national agricultural growth rate of 3.8 per cent.
Government measures, including initiatives to boost Kharif sowing, favourable monsoon conditions, and improved reservoir levels, were credited with aiding this turnaround.
In a bid to ensure balanced infrastructure development across the state, the government launched the Chief Minister’s Infrastructure Development Programme (CMIDP), with an investment of Rs 8,000 crore.
The scheme aims to improve minor irrigation, road networks, and urban infrastructure across all legislative assembly constituencies.
Transparency, governance, and economic growth
The budget highlighted the government’s determination to combat corruption and enhance transparency in administration.
A new counselling-based transfer system is set to be introduced for Group-B and Group-C posts in key revenue-generating departments, including Commercial Tax, Excise, Stamps & Registration, Transport, and Mines & Geology.
Further strengthening governance, technology-driven measures will be implemented, with over Rs 1 lakh crore already directly transferred to beneficiaries' bank accounts, thereby eliminating intermediaries.
On average, Rs 233 crore has been disbursed per assembly constituency under the state’s guarantee schemes, a move aimed at fostering public trust in the administration.
Karnataka continues to be a key contributor to the national economy, accounting for 8.4 per cent of India’s GDP. The state’s economy is projected to expand at 7.4 per cent in 2024-25, surpassing the national average of 6.4 per cent.
Industry and services drive growth
To boost industrial development, Karnataka has introduced a new Industrial Policy (2025-30), with a target of achieving 12 per cent industrial growth and generating 20 lakh jobs by 2030.
The industrial sector has grown at a rate of 5.8 per cent this year, with Rs 13,692 crore set aside for financial assistance and subsidies to attract investments.
Meanwhile, the services sector remains Karnataka’s largest economic contributor, accounting for 66 per cent of the state’s Gross Value Added (GVA).
The sector recorded an 8.9 per cent growth rate, exceeding the national average of 7.2 per cent.
Policies in the information technology, biotechnology, and tourism sectors are expected to generate investments worth Rs 1 lakh crore, with Rs 13,500 crore allocated towards subsidies and financial support.
Revenue mobilisation and federal relations
Karnataka has been vocal in advocating for a fairer revenue-sharing mechanism with the central government.
The state has proposed that 50 per cent of the divisible pool be allocated to states and has also called for capping cesses and surcharges at 5 per cent of gross tax revenue, with excess funds being included in the divisible pool.
Despite financial constraints, Karnataka has maintained a strong revenue collection trajectory. State revenue is expected to grow by 10.3 per cent in 2024-25, while non-tax revenue is projected to reach Rs 14,500 crore, reflecting a 10.5 per cent increase from the previous fiscal year.
To further enhance non-tax revenue, a Resource Mobilisation Committee has been established, and its interim recommendations have been submitted for review.
With a focus on welfare, fiscal prudence, and economic growth, the Karnataka government has sought to strike a balance between social security and industrial progress.
The budget, Siddaramaiah stated, aims to “ensure holistic development while maintaining financial sustainability.”
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