The budget has kept the state’s fiscal deficit target below 3 per cent, as mandated by the state’s fiscal responsibility and budget management Act, and recommended by the union finance ministry.
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The budget has kept the state’s fiscal deficit target below 3 per cent, as mandated by the state’s fiscal responsibility and budget management Act, and recommended by the union finance ministry. It has managed to do so on the back of higher state taxes and share of central taxes.
However, there is also going to be a jump in the state’s liabilities in the coming financial year.
Open market borrowings from the bond markets, for 2025-26, are expected to jump 16 per cent to Rs 1.08 lakh crore from the 2024-25 revised estimates of Rs 90,000 crore.
This partly explains why the Siddaramaiah government has been able to target a 25 per cent jump in capital expenditure for 2025-26.
The capital expenditure budget estimates (BE) for 2025-26 stand at Rs 68,172.24 crore, up from 2024-25 revised estimates (RE) of Rs 54,411.87 crore and 2024-25 BE of Rs 52,902.96 crore.
“For the financial year 2025-26, revenue deficit is estimated to be Rs 19,262 crore, which is 0.63 per cent of gross state domestic product (GSDP). Fiscal deficit is estimated to be Rs 90,428 crore, which is 2.95 per cent of GSDP,” the CM said in his budget speech.
Revenue deficit is the difference between a government’s revenues and administrative expenditure and fiscal deficit is the difference between revenues and total expenditure.
The word ‘deficit’ is used when either expenditure is higher than revenues. Both the deficits are important indicators of a government’s financial health.
In the current financial year, Karnataka borrowed Rs 6,840 less than what it had originally budgeted.
“It should be noted that we managed the guarantees (the state’s five guarantees) within the prudent fiscal deficit norm of 3 per cent of GSDP and debt–GSDP ratio of 25 per cent for the last two budgets,” Siddaramaiah said.