Ahead of Karnataka budget, 16 challenges CM Siddaramaiah faces

Chief minister Siddaramaiah is set to present his record 16th budget Friday, which will bring him just one short of Vajubhai Vala’s record of 17 budgets as Gujarat’s finance minister — the highest ever. But Siddaramaiah faces multiple challenges, including health concerns. He may deliver his budget speech while seated due to knee pain. Confabulations with his doctors continued till late on Thursday. As Karnataka steps into a new fiscal year, TOI lists 16 major challenges his budget is expected to address.
1Record Outlay But Lagging Revenue
Siddaramaiah intends to increase the outlay beyond the psychological mark of Rs 4 lakh crore from Rs 3.7 lakh crore in 2024-25. But revenueearning departments are lagging targets for the current year, with an expected shortfall of around Rs 18,000 crore. Initially aiming for an outlay of Rs 4.1 lakh crore, sources say he may settle for around Rs 4.05 lakh crore
2Increasing Capital Expenditure
Despite record-high revenue collection of Rs 2.6 lakh crore (excluding borrowings), a staggering Rs 1.6 lakh crore would go to committed expenditure — salaries, pensions, and interest payments. With nearly Rs 2 lakh crore needed for subsidies and welfare schemes, only about Rs 60,000 crore (15% of outlay) will remain for capital expenditure (development projects)
3 Containing Committed Expenditure
Cutting down on committed expenditure is crucial, as it comes at the cost of development and welfare schemes. But the govt’s move to indiscriminately reward Congress functionaries with cabinet-rank posts adds to the burden. Reducing administrative inefficiencies is a pressing need
4 Clearing Pending Bills
The govt owes civil contractors Rs 35,000 crore, Escoms Rs 6,000 crore in electricity bills, and Rs 20,000 crore in subsidies for irrigation pump sets. MLAs are also pushing for pending payments under their local area development fund
5 Increasing Non-Tax Revenue
With limited scope to hike taxes, the CM must focus on mobilising nontax revenue, which has stagnated at Rs 13,000 crore for years. Experts emphasise the need to boost non-tax revenue to prevent burdening citizens with more taxes
6 Ensuring Revenue Surplus
Siddaramaiah had projected a Rs 27,354 crore revenue deficit for 2024-25, despite his predecessor Basavaraj Bommai presenting a surplus budget. Borrowing to cover salaries, pensions, and interest contradicts Fiscal Responsibility and Budget Management norms. The CM will aim to restore fiscal discipline
7 Funds for Guarantee Schemes
Delays in direct benefit transfers under guarantee schemes have drawn criticism. While the govt spent Rs 32,000 crore on guarantees in 2023-24, the outlay has now crossed Rs 56,000 crore and may reach Rs 60,000 crore, making timely disbursement a major challenge
8 Fulfilling Poll Promises
Congress promised to reintroduce the old pension scheme (OPS) and increase incentives for milk producers from Rs 5 to Rs 10 per litre. Implementing caste census recommendations is another key promise on which the CM must deliver
9 Managing Borrowings
Karnataka’s total debt has crossed Rs 6.6 lakh crore, requiring Rs 70,000 crore annually to service debt. Siddaramaiah has borrowed over Rs 1 lakh crore this fiscal year. While GSDP is projected to grow from Rs 28 lakh crore to Rs 30 lakh crore, allowing Rs 1 lakh crore more in borrowing, he is expected to exercise restraint
10 Securing Adequate Central Funds
Karnataka is set to miss Rs 28,000 crore in central grants meant for local bodies due to delays in holding ZP/TP and BBMP elections. While tax devolution funds may rise to Rs 50,000 crore, grants for centrally sponsored schemes remain at Rs 15,300 crore. A diplomatic rather than confrontational approach with the Centre is needed
11 Bengaluru Development
Bengaluru, Karnataka’s economic engine, has not received its due share. While the CM allocated Rs 10,000 crore for the city in 2024-25, the opposition BJP is demanding Rs 15,000 crore — a challenging target given the fiscal constraints
12 Equitable Development
While Bengaluru needs significant investments, Siddaramaiah must also ensure balanced development across the state. He is expected to propose measures under the “Beyond Bengaluru” initiative to bridge the gap.
13 Sectoral Allocations And Spending
With only 15% of the budget available for capital expenditure, the CM faces a tough task in allocating funds to key sectors such as agriculture, irrigation, education, health, and infrastructure. Ensuring effective spending remains a challenge
14 Appeasing Vote Banks
With ZP/TP and BBMP polls approaching, pressure to introduce populist measures to secure Congress’s support base among minorities, Dalits, and OBCs. Simultaneously, efforts may be made to attract Lingayat (BJP) and Vokkaliga (JDS) vote banks.
15 Managing Political Challenges
The budget comes amid speculation that Siddaramaiah could be replaced by his deputy, DK Shivakumar. His supporters want him to continue as CM, making this budget crucial to secure his position. But health issues add another layer of complexity
16 New Schemes
Given the historic nature of this budget, expectations are high that Siddaramaiah will introduce landmark schemes. Officials indicate that he may unveil transformative initiatives for both development and welfare. He will have to balance fiscal prudence with political exigencies while addressing Karnataka’s pressing economic and governance challenges