Karnataka Budget Analysis 2025-26

The Chief Minister of Karnataka, Mr. Siddaramaiah, presented the budget for the state for the financial year 2025-26 on March 7, 2025.

Budget Highlights

The Gross State Domestic Product (GSDP) of Karnataka for 2025-26 (at current prices) is projected to be Rs 30,70,103 crore, amounting to growth of 7% over 2024-25.
Expenditure (excluding debt repayment) in 2025-26 is estimated to be Rs 3,83,075 crore, an increase of 12% over the revised estimates of 2024-25. In addition, debt of Rs 26,474 crore will be repaid by the state.
Receipts (excluding borrowings) for 2025-26 are estimated to be Rs 2,92,647 crore, an increase of 13% as compared to the revised estimate of 2024-25.
Revenue deficit in 2025-26 is estimated to be 0.6% of GSDP (Rs 19,262 crore), as compared to a revenue deficit of 0.9% of GSDP (Rs 26,127 crore) at the revised estimate stage in 2024-25.
Fiscal deficit for 2025-26 is targeted at 2.9% of GSDP (Rs 90,428 crore). In 2024-25, as per the revised estimates, fiscal deficit is expected to be 2.9% of GSDP, similar to the budgeted figure.

Policy Highlights

Infrastructure: The Chief Minister’s Infrastructure Development Program has been announced with an allocation of Rs 8,000 crore. It will focus on minor irrigation, roads, and urban infrastructure across the state.
Assistance to government workers: The honorarium for ASHA workers has been increased by Rs 1,000, and for guest teachers in government schools and colleges by Rs 2,000. Honorariums have also been increased for anganwadi workers and helpers, school cooks, Jain priests, Sikh grantis, Pesh-Imams, and Muezzins.
Agriculture: An additional Rs 450 will be provided over the Rs 7,550 per quintal minimum support price for toor dal procurement, with a total allocation of Rs 138 crore.
Reservation in procurement: Additional reservation in government procurement will be provided for contractors and suppliers belonging to Scheduled Castes, Scheduled Tribes, Category-I, Category-IIA, and Category IIB communities.
Ease of Doing Business: The Karnataka Employer’s Compliance Decriminalisation Bill and the Karnataka Employer’s Compliance Digitisation Bill will be introduced, to simplify rules and compliance conditions for industrialists.

Karnataka’s Economy

GSDP: In 2023-24, Karnataka’s GSDP (at constant prices) is estimated to grow by 7% over the previous year. In comparison, India’s GDP is estimated to grow by 9.2% in 2023-24.
Sectors: In 2023-24, agriculture, manufacturing, and services sectors are estimated to contribute 14%, 20%, and 66% of Karnataka’s economy, respectively (at current prices).
Per capita GSDP: In 2023-24, Karnataka’s per capita GSDP (at current prices) is estimated to be Rs 3,68,085, an increase of 9% over the figure for 2022-23. In 2023-24, India’s per capita GDP is estimated to be Rs 2,15,935.

Figure 1: Growth in Karnataka’s GSDP at constant prices (2011-12)

Note: These numbers are as per constant prices (2011-12) which implies that the growth rate is adjusted for inflation.
Sources: MoSPI; PRS.

Budget Estimates for 2025-26

Total expenditure (excluding debt repayment) in 2025-26 is targeted at Rs 3,83,075 crore. This is an increase of 12% from the revised estimate of 2024-25. This expenditure is proposed to be met through receipts (excluding borrowings) of Rs 2,92,647 crore and net borrowings of Rs 89,526 crore. Total receipts for 2025-26 (other than borrowings) are expected to register an increase of 13% over the revised estimate of 2024-25.
The state estimates a revenue deficit of 0.6% of GSDP (Rs 19,262 crore) in 2025-26, as compared to a revenue deficit of 0.9% of GSDP at the revised estimate stage of 2024-25.
Fiscal deficit for 2025-26 is targeted at 2.9% of GSDP (Rs 90,428 crore), 9% higher than the revised estimates for 2024-25 (Rs 82,940 crore). As a percentage of GSDP, fiscal deficit was 2.9% as per the revised estimates for 2024-25, and 2.6% for 2023-24.