Karnataka better placed than its progressive neighbour in fiscal deficit: Siddaramaiah

Blaming the Centre’s policies for Karnataka recording revenue deficits since 2023-2024, Chief Minister Siddaramaiah on Wednesday said that State’s fiscal deficit was well under the limit and Karnataka was better placed than its progressive neighbouring Maharashtra, Tamil Nadu, Andhra Pradesh and Kerala.

He said that a delegation cutting across party lines has to approach the Centre for higher allocation, since the 16th Finance Commission has fixed allocation for the State at 4.131 % against the State’s demand of 4.7%.

Comparing the State’s economy to that of other progressive States in the country and also the Union government, the Chief Minister, who presented a record 17th Budget, said that though the State liked to overcome revenue deficit in 2026-2027, it was not possible due to non-cooperation from the Centre. The GST rationalisation has caused estimated losses of ₹10,000 crore this year and is estimated to result in losses of ₹ 15,000 crore in 2026-27, he said, adding that due to this revenue deficit ballooned to ₹22,957 crore in the revised estimates for 2025-26.

Decline in tax share

“The decline in the tax share from the 15th Finance Commission between 2023 and 2025 has led to shortfall of ₹ 39,500 crore. The Centre has failed to address the loss suffered by the State due to GST. As against the estimated protected revenue, the GST collection came down by ₹30,871 crore in 2023-24 and by ₹40,368 crore in 2024-2025. All these has led to the revenue deficit Budgets in the State since 2023-2024,” the Chief Minister told Legislative Assembly in his reply on the Budget discussion. The revenue deficit has also been caused as the Centre has stopped providing GST compensation since 2023, he added.

Comparing the State’s economy with that of the Centre on several parameters, including fiscal deficit, revenue deficit, debt and social sector spending, throughout his speech, the Chief Minister said that his government believed with demand driven economy instead of the BJP’s belief in supply driven economy.

Defending the Budget estimates for loans this year, which is at ₹1.32 lakh crore, the Chief Minister said that it is not possible for any State or country to undertake social welfare and development without loan. He pointed at loans raised by earlier BJP government in the State and also the Centre now.

“Debt is on higher side in every developed economy. However, one should see if loan has been utilised for the welfare of the people. The BJP left an outstanding loan of ₹5.53 lakh crore,” he said, adding that BJP-ruled Gujarat that does not spend any money on welfare schemes such as guarantees is raising about ₹1 lakh crore as loans, he pointed out.

“Our spend on capital expenditure in the last three years is more than what the BJP government in State spent in its earlier tenure. I am never against taking loan nor will say that.”

“So far, ₹1.31 lakh crore has been spent on guarantees. In (BJP-ruled) Maharashtara, allocation on public welfare scheems is coming down. However, we are providing same allocation to guarantee schemes every year,” he said.

Other States

On the criticism over fiscal deficit, Mr. Siddaramaiah said, “Every budget of the State since 2000 had fiscal deficit. Even the four years tenure of yours (BJP’s rule between 2019 and 2023) had fiscal deficit. The fiscal deficit is at 2.95 %, which is within the 3% limit. Fiscal deficit in Karnataka is less than Maharashtra (3%), Andhra Pradesh (4.5%), Kerala (3.8%) and Tamil Nadu (3.5%)”

While the Opposition BJP-Janata Dal (Secular) members staged a walkout raising slogans, soon after the Chief Minister’s reply that lasted more than five hours, the Appropriation Bill was passed in their absence.