Karnataka CM Siddaramaiah to present record 17th budget on March 6

Siddaramaiah and DK Shivakumar

• Siddaramaiah to present his 17th Karnataka budget on March 6
• FY27 budget outlay expected at Rs 4.5 lakh crore
• State faces budget strain from welfare and infrastructure costs

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Karnataka Chief Minister Siddaramaiah, who also holds the Finance portfolio, will present his record 17th state budget on March 6, the highest number of budgets presented by any finance minister in the state.

The budget for FY27 is expected to be around Rs 4.5 lakh crore, higher than the Rs 4.09 lakh crore outlay in 2025-26.

The budget comes amid rising fiscal pressures, with Congress-led government needing to balance spending on its five welfare guarantees and long-term infrastructure and development projects. Bengaluru, in particular, could see a focus on civic and infrastructure initiatives ahead of Greater Bengaluru Authority (GBA) elections.

Siddaramaiah recently became Karnataka’s longest-serving Chief Minister surpassing the tenure of former chief minister D Devaraj Urs.

Fiscal pressures

The 2026-2027 budget is expected to be a tightrope walk for the state government as it navigates mounting fiscal pressures and slower revenue growth.

According to the 2025-26 budget estimates, Karnataka’s total liabilities are projected at Rs 7,64,655 crore by the end of March 2026, which is 24.91 percent of the Gross State Domestic Product (GSDP). However, a Reserve Bank of India (RBI) report has estimated the state’s liabilities at Rs 8.14 lakh crore, equivalent to 26.5 percent of GSDP, by the end of 2025-26.

State disputes higher liability estimate

State government officials say the higher figure cited in the RBI report includes items that do not represent the state’s actual debt obligations. A senior finance department official said the estimate includes Rs 20,412 crore borrowed by the Union government for GST compensation to states, which is serviced through a cess collected by the Centre.

It also includes around Rs 23,810 crore in state cess collections parked in earmarked funds for infrastructure investments, which officials say have been double counted under public account balances.

In addition, nearly Rs 16,300 crore invested by the state in the Consolidated Sinking Fund and Guarantee Redemption Fund maintained by the RBI has been treated as liabilities, even though these are security reserves meant for future repayments. Because of these factors, the state government estimates that about Rs 60,500 crore has been incorrectly reflected as liabilities in external assessments. Officials said the government has communicated the issue to the Accountant General seeking reclassification.

Liability trend

Karnataka’s total liabilities have risen steadily in recent years. The state’s liabilities stood at Rs 5,22,847 crore in 2022-23, which was 23.97 percent of GSDP. This increased to Rs 6,03,015 crore in 2023-24, or 23.49 percent of GSDP. In 2024-25, liabilities rose further to Rs 6,84,428 crore, accounting for 23.91 percent of GSDP. For 2025-26, budget estimates project total liabilities at Rs 7,64,655 crore, or 24.91 percent of GSDP.

Additional spending pressures

Apart from funding welfare guarantees, the state is also facing fresh spending pressures, including compensation related to the Krishna Upper Stage-III irrigation project, higher state contributions to centrally sponsored schemes, and potential revenue losses from GST rate rationalisation. These factors are expected to weigh on the state’s fiscal calculations as Siddaramaiah is set to present the budget.