“Public debt receipts, which reflect the borrowings of the state, have progressively increased reaching Rs 1,16,000 crores in 2025-26 (Budgeted Estimate, or BE) from Rs 44,549 crores in 2022-23,” according to the Commission’s report.
According to the Medium Term Fiscal Plan (MTFP), Karnataka is estimated to borrow Rs 1,32,000 crore in 2026-27 fiscal year, representing a 13.8 percent growth over the corresponding year.
“Without raising loans, there cannot be any development,” Karnataka Chief Minister Siddaramaiah said a day before presenting the budget on 6 March.
Even during the Budget, Siddaramaiah dedicated nearly seven of his 208-page budget to emphasise the declining inflows of funds from the Centre, justifying the higher borrowings.
“The cow that yields abundant milk requires proper care,” he said in his budget, chiding the Union government.
Karnataka, however, remains one of India’s biggest growth drivers and its Gross State Domestic Product (GSDP) (current prices) is projected to increase from Rs 25,67,340 crore in 2023-24 to Rs 48,30,867 crores in 2029-30.
However, multiple government finance reports show that a significant chunk of this growth will have to rely on higher borrowings.
Siddaramaiah, who also holds the finance portfolio, is now attempting to identify resources which can be monetised to help mitigate the growing fund crunch and reduce borrowings.
Karnataka is among the biggest growth engines of India, contributing significantly in the services and other sectors, attracting a steady flow of foreign direct investment (FDI) and other capital by global corporations who want to set up shop in the southern state.
But the Congress government has been criticised for prioritising funding its flagship guarantee programmes over building long-term assets that can generate employment and boost the local economy.
