Key takeaways from Karnataka Budget 2026-27: AI push, second Bengaluru airport, under-16 social media ban

• Karnataka tables Rs 4.48 lakh crore budget for 2026-27
• AI Centre of Excellence and robotics zone announced for Bengaluru
• Social media ban proposed for children under 16 in Karnataka

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Karnataka Chief Minister Siddaramaiah presented his historic 17th state budget on Friday, tabling a Rs 4.48 lakh crore outlay for 2026-27 that balances technology-led growth with pressing urban challenges, even as the state grapples with a significant shortfall in GST revenue.

Presenting the budget in the Vidhana Soudha, the Chief Minister framed the fiscal plan as one of "responsibility and foresight," aimed at converting challenges into opportunities. "Innovations in science and technology are increasingly shaping the trajectory of the state," Siddaramaiah said, emphasising Karnataka's distinctive role in global trade and the transformative impact of Artificial Intelligence on production systems.

However, the government’s fiscal math has been strained by the GST rate rationalisation implemented in September 2025. The Chief Minister revealed that while the state’s average monthly GST revenue growth was around 10 per cent earlier in the fiscal year, it has since moderated sharply to roughly 4 per cent.

The restructuring is projected to reduce Karnataka's GST collections by approximately Rs 10,000 crore in the current financial year, with an even steeper estimated shortfall of Rs 15,000 crore in 2026-27.

To ease congestion at Kempegowda International Airport, the third-busiest in the country, the government announced plans for a second airport in Bengaluru. A feasibility report will be prepared following technical consultation with the Airports Authority of India.

A sum of Rs 1,593 crore has been allocated for the development of seven domestic airports across Karnataka, with Rs 200 crore earmarked for expenditure in the current financial year.

The government will facilitate aircraft manufacturing and assembly activities at Shivamogga airport through the public-private partnership (PPP) mode.

In a bid to cement Bengaluru’s status as a global tech hub, the budget allocates Rs 16 crore to establish a state-of-the-art AI Centre of Excellence. The centre will be developed in collaboration with the Institute of Bioinformatics and Applied Biotechnology, the Centre for Cellular and Molecular Platforms and NASSCOM.

Furthermore, the government announced the "Bangalore Robotics and AI innovation zone," a campus to be set up in collaboration with the Indian Institute of Science (IISc), ISRO, and Keonics, aimed at fostering advancements in robotics.

Addressing one of Bengaluru’s most persistent infrastructural woes, Siddaramaiah announced a major initiative under the World Bank-funded Karnataka Water Security and Resilience Programme (KWSRP). A Rs 5,000 crore project will be undertaken over five years to mitigate the recurrent flooding that cripples large parts of the city during heavy rainfall.

In a significant move targeting child welfare and digital safety, the state proposed banning social media for children under the age of 16. The Chief Minister stated the measure is aimed at "preventing the adverse effects of increasing mobile usage" and the negative impact it has on young minds.

Other key announcements included the establishment of a Leopard Rehabilitation Centre at the Bannerghatta Biological Park, with an outlay of Rs 5 crore, to humanely rehabilitate leopards captured from the city’s expanding peri-urban fringes. In a bid to enhance transparency in governance, Siddaramaiah noted that transfers within the Excise Department — for Group-C officers as well as Deputy Superintendents and Superintendents — are now being conducted through a digital counselling process.

The budget drew sharp reactions from the opposition. Former Chief Minister and BJP leader Basavaraj Bommai dismissed the exercise, calling it a "poor budget." "There is zero development and no progress in this budget. The government has taken on a large amount of debt," Bommai told reporters.

Conversely, the ruling party welcomed the comprehensive nature of the outlay. Congress MLA Rizwan Arshad defended the budget, highlighting its sustained focus on welfare and asset creation. "The 17th budget is remarkable... he has reiterated our commitment to continue to fund the Guarantee Schemes, then good number of investment in public health, very big investment in public education and for farmers plus Rs 72,000 crore for capital expenditure, building up assets and development work. So, this is a very balanced budget," Arshad told reporters.