Karnataka Budget: Rs 5,300 cr allocated for free bus scheme; tax breaks also likely

Bengaluru: Rs 5,300 crore has been allocated in the 2025-26 Karnataka Budget for the Shakti scheme, the Congress government's flagship guarantee which provides free travel for women of Karnataka domicile in all non-premium government buses.

The Rs 5,300 crore is about 5.5% higher than the last budgetary allocation of Rs 5,015 crore.

As per the standard practice, the scheme will be financed from three sources: Rs 3,730 crore in subsidies (financial assistance), Rs 1,060 crore in Scheduled Caste Sub Plan, and Rs 4,77 crore in Scheduled Tribe Sub Plan.

The government is also expected to provide about Rs 700 crore as tax breaks to Road Transport Corporations (RTCs) for new vehicle purchases.

As a result, the scheme is expected to cost Rs 6,000 crore in the next financial year.

Launched on June 11, 2023, the scheme has been a runaway hit, reaching a new milestone of 400 crore beneficiaries on February 24, 2025. The total expenditure is Rs 9,803 crore.

Rs 4,380.37 crore was incurred between June 11, 2023, and March 31, 2024. The expenditure for the current year (April 1, 2024, to February 24, 2025) was Rs 5,290.825. The scheme is expected to cost another Rs 600 crore for the remainder of this fiscal year, taking the total expenditure to over Rs 5,800 crore.

Besides the budgetary allocation of Rs 5,015 crore in FY24-25, the government is giving RTCs about Rs 600 crore in tax breaks for new vehicle purchases, which is considered part of the scheme’s cost.

While RTCs have complained about the delay in funding for the scheme, the government expects them to claim reimbursement only according to incremental expenditure, for which a formula is being worked out, according to a senior government official.