Karnataka Government Fiscal Gap

Current revenue shortfall and fiscal gap figures for Karnataka

The current revenue shortfall and fiscal gap figures for Karnataka are as follows:

- For the financial year 2024-25, Karnataka's revenue deficit is estimated at Rs 27,354 crore, which is about 1% of the Gross State Domestic Product (GSDP). This is higher than the revised estimate for 2023-24, which was around 0.5% of GSDP [3].
- The fiscal deficit for 2024-25 is targeted at Rs 82,981 crore, approximately 3% of GSDP, which is also higher than the previous year's revised figure of 2.7% of GSDP [3].
- For the financial year 2025-26, the revenue deficit is projected to be Rs 19,262 crore, about 0.6% of GSDP, showing some improvement in deficit control. The fiscal deficit for 2025-26 is estimated at Rs 90,428 crore, roughly 2.95% of GSDP. Total liabilities at the end of 2025-26 are expected to reach Rs 7,64,655 crore, or 24.91% of GSDP [2].
- Additionally, Karnataka experienced a revenue shortfall of about Rs 12,000 crore reported earlier, linked to expenditures on welfare schemes and other fiscal pressures [10].

Overall, Karnataka is managing a significant revenue shortfall and fiscal gap but is showing efforts to maintain fiscal discipline within the limits mandated under the Karnataka Fiscal Responsibility Act [2][3].

These figures reflect the state's ongoing financial challenges amid large welfare commitments and development needs.

Citations:
[1] Karnataka: Revenue Surplus or Deficit | Economic Indicators https://www.ceicdata.com/en/india/state-accounts-karnataka/karnataka-revenue-surplus-or-deficit
[2] Fiscal deficit maintained in FY26, focus on B'luru https://www.business-standard.com/india-news/fiscal-deficit-maintained-in-fy26-focus-on-b-luru-cm-on-karnataka-budget-125030700285_1.html
[3] Karnataka Budget Analysis 2024-25 https://prsindia.org/budgets/states/karnataka-budget-analysis-2024-25
[4] K'taka misses tax collection target by nearly 10% despite ... https://timesofindia.indiatimes.com/city/bengaluru/ktaka-misses-tax-collection-target-by-nearly-10-despite-rate-hikes/articleshow/120005886.cms
[5] Karnataka Budget Analysis 2025-26 https://prsindia.org/files/budget/budget_state/karnataka/2025/Karnataka_State_Budget_Analysis_2025-26.pdf
[6] Macro and Fiscal Landscape of the State of Karnataka https://www.niti.gov.in/sites/default/files/2025-03/Macro-and-Fiscal-Landscape-of-the-State-of-Karnataka.pdf
[7] Government of Karnataka - FISCAL POLICY INSTITUTE https://fpibengaluru.karnataka.gov.in/storage/pdf-files/Intern%20Reports/InternshipReport_ShashankKumarSK_21012025.pdf
[8] 6 Fiscal Deficit and Economic Growth Relationship ... https://fpibengaluru.karnataka.gov.in/storage/pdf-files/Technical%20Reports/6%20Fiscal%20Deficit%20and%20Economic%20Growth%20Relationship%20in%20Karnataka.pdf
[9] ACCOUNTS AT A GLANCE (At the end of JANUARY 2025) https://cag.gov.in/uploads/state_accounts_report/account-report-MKI-Jan-2025-067aebff90481b4-43676747.pdf
[10] Karnataka Faces Rs 12000 Cr Revenue Shortfall https://timesofindia.indiatimes.com/city/bengaluru/karnataka-faces-rs-12000-cr-revenue-shortfall-major-changes-ahead-for-welfare-schemes/articleshow/114785855.cms