Karnataka Government borrowing plan

Projected fiscal gap and borrowing plan for 2025-26

For the fiscal year 2025-26, Karnataka's projected fiscal gap and borrowing plan are as follows:

- The state's fiscal deficit is targeted at approximately 2.95% of its Gross State Domestic Product (GSDP), with an estimated fiscal deficit amount of Rs 90,428 crore [10].
- The projected revenue deficit is about Rs 19,262 crore, or roughly 0.6% of GSDP, indicating some narrowing compared to the previous year [10].
- Karnataka’s total liabilities are expected to increase to Rs 7.64 lakh crore, about 24.91% of its GSDP by the end of 2025-26 [10].
- The borrowing plan includes managing this fiscal deficit primarily via market borrowings, with the state likely to align with the broader fiscal discipline signals from the Central Government, which targets a 4.4% fiscal deficit of GDP at the national level [4].
- The central government plans substantial transfers and loans to states including Karnataka, amounting to Rs 1.5 lakh crore in interest-free capital expenditure loans for 2025-26, which will support the state’s fiscal management [4].
- Karnataka's borrowing will thus include a combination of internal borrowing through market loans and external assistance through central transfers and loans, aimed at balancing development needs and fiscal prudence [10][4].

In summary, Karnataka's fiscal gap for 2025-26 is projected around Rs 90,000 crore with strategic borrowing and state-central financial coordination to manage expenditures and liabilities within targeted fiscal deficit limits. This reflects a cautious approach to maintain fiscal health while supporting economic growth and welfare commitments.

Citations:
[1] India targets fiscal deficit at 4.4% for 2025-26, sets path to ... https://www.cnbc.com/2025/02/01/india-targets-fiscal-deficit-at-4point4percent-for-2025-26-sets-path-to-bring-down-debt.html
[2] India's borrowing plan for FY26 second half unchanged, ... https://www.reuters.com/world/india/indias-borrowing-plan-fy26-second-half-unchanged-chief-adviser-says-2025-09-22/
[3] India's borrowing plan for FY26 second half unchanged, ... https://www.business-standard.com/finance/news/india-to-keep-fy26-second-half-borrowing-plan-unchanged-chief-adviser-says-125092200763_1.html
[4] Union Budget 2025-26 Analysis https://prsindia.org/files/budget/budget_parliament/2025/Union_Budget_Analysis_2025-26.pdf
[5] India's Union Budget FY 2025-26: Key Takeaways https://www.investindia.gov.in/team-india-blogs/indias-union-budget-fy-2025-26-key-takeaways
[6] summary of union budget 2025-26 https://www.pib.gov.in/PressReleasePage.aspx?PRID=2098352
[7] BUDGET 2025-2026 NIRMALA SITHARAMAN https://www.indiabudget.gov.in/doc/budget_speech.pdf
[8] Second half market borrowing to remain unchanged: CEA https://economictimes.com/news/economy/policy/second-half-market-borrowing-to-remain-unchanged-cea/articleshow/124050712.cms
[9] Budget 2025: Fiscal deficit for FY26 estimated to be 4.4% ... https://www.cnbctv18.com/budget/budget-2025-fm-nirmala-sitharaman-fiscal-deficit-fy26-at-4-4-pc-market-borrowing-tax-receipts-19550472.htm
[10] 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