Union Budget 2026: Karnataka CM Siddaramaiah slams retention of 41% tax devolution, says states’ fiscal responsibilities ignored

• Karnataka CM Siddaramaiah criticizes Union Budget for unclear execution plans
• He says Karnataka's share of divisible taxes reduced, impacting state projects
• CM calls budget disappointing for farmers, neglects key irrigation projects

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Karnataka CM Siddaramaiah on February 1 criticised Union budget 2026-27, saying it relied heavily on grand narratives like Viksit Bharat and Kartavya, but offered little clarity on execution, timelines, or accountability.

Siddaramaiah also criticised the Union government for retaining devolution at 41 percent despite increasing fiscal responsibilities of states.

He said that rising cesses and surcharges, unilateral GST rate decisions, and state-funded Centrally sponsored schemes shifted the financial burden onto states, undermining cooperative federalism.

Also, read: Union Budget 2026: Karnataka says Bengaluru-Mumbai or Pune high speed rail would benefit the state more

The CM said that Karnataka had sought fairness in allocations, but budget instead delivered neglect. He pointed to the state’s reduced share of divisible taxes-down to 4.131 percent from 4.71 percent under 14th Finance Commission- which he said would result in an annual loss of Rs 10,000-15,000 crore, impacting welfare, infrastructure, irrigation, and development projects.

Siddaramaiah said  budget “reads more like a compilation of high-level jargon than a serious policy document,” adding that while the speech is rich in intent statements, it is poor in fiscal commitment. “Vision is announced, execution is postponed,” he said.

On fiscal management, CM said that the reported 4.4 percent fiscal deficit for 2025-26 was largely due to under-spending and deferred commitments, not improved revenue collection or efficiency. “Fiscal discipline cannot be built by postponing promises. True credibility comes from delivering on what is announced,” he said.

Siddaramaiah also raised concerns over the proposed high-speed rail corridors from Hyderabad and Chennai to Bengaluru, saying these largely benefit other states while failing to strengthen Karnataka’s connectivity to Mumbai or Pune, which he termed essential for balanced economic growth.

The CM called the Budget disappointing for farmers, pointing to the lack of concrete measures for sugarcane, toor dal, and other food grain producers. Major irrigation projects in Karnataka, including Mekedatu, Upper Bhadra, Upper Krishna, and Mahadayi, were said to have been overlooked, further highlighting the state’s neglect.

He also criticised the handling of the Jal Jeevan Mission, stating that of the Rs 67,000 crore budgeted for 2025-26, only Rs 17,000 crore is likely to be spent, with Karnataka still owed Rs 13,004.63 crore from the Centre.

Siddaramaiah further expressed concern over the omission of Karnataka from the proposed Rare Earth Corridors, despite the state’s known deposits in regions such as Chamarajanagar, calling the planning “selective” and politically convenient.

“Budget announcements should provide clarity and confidence, not manage perceptions through vocabulary,” Siddaramaiah said. “Vision without intent and allocation is not leadership; it is distraction, and unfortunately, that is what this budget reflects.”