the 16th State Budget Chief Minister Siddaramaiah presented in the Legislative Assembly on Friday clearly showed that the guarantee-led model formed the core philosophy of the Congress government.
The overall Budget strategy seems to be aimed at enabling private sector investment while concentrating the State’s resources on the poor and the needy to ensure opportunities.Among other things, it set aside a whopping ₹1,56,117 crore for women and children-centric programmes, 38% of the total Budget outlay. The Budget provided financial support for five guarantees (₹51,034 crore) for achieving an equitable distribution of wealth.
No new taxes
The Budget announced no new taxes, except to increase the professional tax payable by salary and wage earners from ₹200 to ₹300 for February to align with the maximum limit of ₹2,500 a year.
Karnataka joined the elite club of States with the Budget size of over ₹4 lakh crore (₹4,09,549 crore) for the first time this year.
Uttar Pradesh, Maharashtra, and Tamil Nadu have already crossed the Budget size ₹4 lakh crore.
Like the previous Budget, the 2025-26 Budget has a revenue deficit, pegged at ₹19,262 crore. The borrowing is pegged at ₹1,16,000 crore, which is 28% of the Budget size.
For the betterment of the low salaried class, the Chief Minister proposed a slew of hikes in the monthly honorarium of guest lectures, ASHA and anganwadi workers, cooks working in government schools, Jain priests, chief grantis of Sikhs and Pesh-Imams of mosques, and archakas of temples.
For promoting women SHGs, the Budget proposed to set up Akka Cooperative Society in the State and ‘Akka café and canteen’ in district and taluk panchayat offices. It has proposed to provide 8% interest subsidy for loans up to ₹1 lakh for registered street vendors.
Interestingly, as legislators are constantly seeking funds for development of their constituencies, the Chief Minister’s Infrastructure Development Programme has been proposed in the Budget with ₹8,000 crore, focusing on minor irrigation, roads and urban infrastructure in all Assembly constituencies.
Rate of growth
On a positive note, the Budget pointed out that the farm sector registered a growth of 4% in 2024-25, after clocking a negative growth of 4.9% in 2023-24.
While the industrial sector recorded 5.8% growth (it was 7.7% in 2033-24), the service sector registered 8.9% in 2024-25. The State’s GSDP is poised to grow at 7.4% as against the nation’s 6.4%. Overall exports recorded a growth of 11.17%. Karnataka has contributed 8.4% to the national GDP in 2024-25.
Mr. Siddaramaaih took a dig at the Centre for its failure to compensate for GST loss, non-devolution of cesses and surcharges and lower tax devolution from the 15th Finance Commission. The decline from 14th Finance Commission to 15th Finance Commission is estimated at ₹12,000 a year.
In what the Opposition called “minority appeasement”, the government has allocated ₹4,500 crore for minority communities. The Budget allocated ₹4,300 crore for OBC programmes and ₹42,018 crore under the SC Sub-Plan and Tribal Sub-Plan.
For stimulating entrepreneurship in Tier-II and III cities/towns, it proposed a Local Economy Accelerator Programme with a grant of ₹1,000 crore and the industry status to the cinema sector.
The total receipts are estimated at ₹4,08,647 crore, while the total expenditure is estimated at ₹4,09,549 crore. The Budget outlay included revenue expenditure of ₹3,11,739 crore, capital expenditure of ₹71,336 crore and loan repayment of ₹26,474 crore.
The revenue deficit is estimated at ₹19,262 crore (0.63% of GSDP) and the fiscal deficit is estimated at ₹90,428 crore (2.95% of GSDP).
The total liabilities at the end of 2025-26 is estimated to be ₹7,64,655 crore (24.91% of GSDP). The borrowings and fiscal deficit have been kept within permissible limits of the Karnataka Fiscal Responsibility Act, 2002, and thus maintained fiscal discipline. Mr. Siddaramaiah has bet that Karnataka would turn revenue surplus next year.
The Chief Minister, who has suffered a leg injury, read a few paragraphs of the Budget standing in the House but later completed the speech seated.
Reservation for Muslims in government contracts
₹50,000 assistance for Muslim simple marriages
₹150 crore for infrastructure development of Waqf properties & graveyards
₹50 lakh for Muslim cultural programs
New ITI college to be set up in Muslim-dominated areas
50% fee concession for Muslim students under KEA
Residential PU college for Muslim girls in Ullal town
Increase in National & Foreign Scholarships for Muslim students
Expansion of Bengaluru’s Haj Bhavan with additional buildings
Self-defense training for Muslim girl students
