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by IANS |
Bengaluru, March 25 (IANS) Defending the State Budget 2026–27, Karnataka Chief Minister Siddaramaiah, responding to criticism from the Opposition, said, “Even when compared to the progressive states around us in South India, our fiscal deficit remains within the prescribed limits. Opposition leader R. Ashoka has not studied the budget in depth. All his efforts seem to be focussed on getting headlines.”
Speaking at the Legislative Assembly on Wednesday, CM Siddaramaiah stated, "As per the revised estimates for 2025–26, the state’s fiscal deficit will be 2.95 per cent. In comparison, it is 3.0 per cent in Maharashtra, 4.5 per cent in Andhra Pradesh, 3.8 per cent in Kerala, and 3.5 per cent in Tamil Nadu."
"Ideally, there should be no revenue deficit. However, a revenue deficit exists not only in states like Maharashtra and other southern states, but also at the level of the Union government. Among them, Karnataka and Maharashtra have relatively lower revenue deficits," CM Siddaramaiah noted.
"Opposition leaders such as BJP State President and MLA, B.Y. Vijayendra, have alleged that the budget is being revised every year due to poor revenue collection. Compared to budget estimates, the actual or revised own revenue collections of neighbouring states have been lower.
"This is not a problem unique to Karnataka. It is a result of immature economic policies of the Union government. Even so, compared to neighbouring states, our own revenue collection has been better," CM Siddaramaiah criticised.
The Union government’s sudden rationalisation of GST rates in the middle of last year adversely impacted the state’s economy. Before the GST rate rationalisation in 2025–26, the state’s average monthly GST revenue had recorded a growth of 10 per cent.
However, after the rationalisation, the monthly growth in GST collections dropped to 4 per cent. It is estimated that the shortfall will be around Rs 10,000 crore in 2025–26 and may rise to Rs 15,000 crore in 2026–27. As a result, the revised estimate for 2025–26 projects a revenue deficit of Rs 22,957 crore, the CM said.
He further stated, "Did the GST rate revision benefit the public? Not significantly. Apart from a slight reduction in the prices of cars and bikes, there has been little benefit. Neither the public nor welfare measures have gained much, while multinational companies and corporate entities have benefited. Despite all this, we estimate that revenue collection will be higher by about Rs 22,573 crore compared to last year’s budget. The estimate of Rs 2.92 lakh crore last year is expected to increase to Rs 3.15 lakh crore this year."
He stated that the state’s share in central tax devolution has reduced from 4.713 per cent as per the 14th Finance Commission to 3.647 per cent under the 15th Finance Commission — a reduction of about 23 per cent.
"The state had urged the 16th Finance Commission to adopt a formula that balances equity and growth while ensuring fair tax distribution. The 16th Finance Commission has recommended a 4.131 per cent share for Karnataka. While this is a 13 per cent increase over the 15th Finance Commission’s recommendation and partially addresses our demand, it still falls short of a fair share," he said.
Opposition leaders have claimed that during the BJP government’s tenure, there were surplus budgets, whereas the current government is presenting deficit budgets with revenue shortfalls, he maintained.
"I have reviewed all state budgets since 2000. Every budget has had a fiscal deficit, including during BJP's four-year tenure. The surplus during that period was due to the lump-sum release of GST compensation. Opposition members are speaking without understanding these facts," CM Siddaramaiah chided.
"As per the Karnataka Fiscal Responsibility Act, the state had been maintaining a revenue surplus. However, due to the Union government’s failure to fully compensate for GST-related revenue losses, exclusion of cesses and surcharges from the divisible tax pool, and the reduced tax share under the 15th Finance Commission, the state has faced financial challenges," CM Siddaramaiah stated.
With the discontinuation of GST compensation from 2023–24, the state’s GST collections fell short of the protected revenue by Rs 30,871 crore in 2023–24 and Rs 40,368 crore in 2024–25. Additionally, due to the reduced tax share under the 15th Finance Commission, the state incurred a loss of Rs 39,500 crore between 2023–24 and 2025–26. As a result, the state has been facing a revenue deficit since 2023–24, CM Siddaramaiah stated.
During the BJP government’s tenure (2019–2022), the Union government provided GST compensation, amounting to a total of Rs 57,351 crore. However, after our government came to power, the Union government stopped providing GST compensation from 2023 onwards. This led to reduced revenue collection and a revenue deficit, CM Siddaramaiah stated.
Since the implementation of GST in 2017, due to the injustice of the 15th Finance Commission, non-implementation of its recommended grants, denial of GST compensation, and what we consider betrayal by the Union government, the state has suffered losses exceeding Rs 2,00,000 crore, he underlined.
In such a situation, how can state economies sustain themselves? Despite all these challenges, we are continuing to manage the state effectively. Meanwhile, Gujarat, which does not spend on welfare guarantee schemes like ours, is borrowing around Rs 1,00,000 crore this year, CM Siddaramaiah stated.
"It is clear that the revenue deficit has arisen due to multiple reasons: Reduced tax devolution under the 15th Finance Commission, denial of recommended grants by the Union government, discontinuation of GST compensation, GST rate rationalisation, and inadequate funding for centrally-sponsored schemes such as the Jal Jeevan Mission," he stated.
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