BENGALURU: Even as the ruling Congress dispensation in Karnataka has expressed dissatisfaction with the Union Budget for failing to announce any state-specific schemes or special grants for irrigation projects, the sole consolation has been the Budget’s adoption of the 16th Finance Commission’s recommendation.
As per the Budget, Karnataka’s share in the Central tax pool has been increased to 4.13 per cent under the 16th Finance Commission, up from 3.64 per cent under the 15th Finance Commission. This enhancement of 0.49 percentage points is expected to add around Rs 12,000 crore to Rs 15,000 crore annually to the State’s exchequer. The additional resources are likely to ease the fiscal burden, particularly as the State is committed to spending nearly Rs 59,000 crore every year on its five guarantee schemes.
Karnataka had earlier been allotted 4.7 per cent under the 14th Finance Commission, which was subsequently reduced to 3.64 per cent by the 15th Finance Commission. Chief Minister Siddaramaiah has asserted that even the revised 4.13 per cent allocation is inadequate, especially when compared to Uttar Pradesh, which will receive 17.619 per cent.
When the 16th Finance Commission delegation led by Arvind Panagariya visited Karnataka in August 2024, the State made what it termed an “impressive” presentation, claiming a cumulative loss of Rs 80,000 crore due to earlier devolution formulas. The State sought a revision of the criteria, advocating greater weightage to efficiency parameters over equity considerations.
As recommended by the Commission, States will continue to receive 41 per cent as their vertical share of tax devolution. In addition, Rs 1.4 lakh crore has been earmarked for States in FY 2026–27 for rural and urban local bodies and disaster management grants.
Among infrastructure announcements, the proposed high-speed rail corridors between Hyderabad–Bengaluru and Chennai–Bengaluru are expected to boost trade and services. However, Siddaramaiah’s economic adviser and MLA Basavaraj Rayaraddi noted that a Mumbai–Bengaluru corridor would have provided a greater impetus to trade and commerce.
Sector-specific measures include the Coconut Promotion Scheme aimed at increasing production and productivity by replacing old and non-productive trees with new saplings and improved varieties. The scheme is expected to benefit districts such as Tumakuru, Hassan, Mandya, Chitradurga, Chikkamagaluru, Dakshina Kannada and Udupi. Another State-specific highlight is the announcement of turtle trails along key nesting sites in Karnataka’s coastal regions.