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The government, in its report titled ‘Mid-Year Review of State Finances’ presented in the Assembly, said the state economy is expected to remain on the growth path this financial year, supported by adequate rainfall.
The five guarantee schemes are ‘Griha Jyoti’ which provides 200 units of free electricity to every household, ‘Griha Lakshmi’ scheme is promising.
‘Anna Bhagya’ is giving Rs 2,000 to each female head of the family and 10 kg rice to each member of a BPL family in a month.
‘Youth Fund’ promises $3,000 more to unemployed graduates Rs 1,500 for two years (in the 18-25 age group) to unemployed diploma holders, and the ‘Shakti’ scheme allows women from Karnataka to travel within the state in government-run non-luxury buses for free.
“The increase in revenue expenditure has been driven by an increase in committed expenditure, including state expenditure on guarantees and various welfare schemes,” the report said.
“Additionally, the decline in revenue receipts due to GST rate rationalization has further strained the fiscal position of the State. These factors have collectively led to an increase in the revenue deficit during the current financial year.”
To mitigate these challenges, the state said it has made concerted efforts to mobilize its own tax revenue to increase revenue collections.
“Additionally, expenditure rationalization initiatives are being taken to reduce revenue deficit in the remaining part of the year, to control non-essential expenditure and to protect allocations for priority development sectors,” the government said.
The report said the state’s economy is expected to remain on a growth path this financial year, supported by adequate rainfall.
Government estimated Gross State Domestic Product (GSDP) 30,91,111 crore for 2025-26, citing the Finance Ministry.
“The state’s economy is expected to continue its growth path in 2025-26, with adequate rainfall likely to further boost agricultural output, while strong performance in the services and industrial sectors maintains economic momentum,” the report said.
The government said inflation remained under control during the first half of the fiscal year, with a good monsoon helping to keep food prices low.
Karnataka’s fiscal performance in the first half of 2025-26 was strong, with revenue collections recording a 7.7% year-on-year growth, the report said.
“The state continues to demonstrate strong tax administration and economic activity and ranks second in the country in gross GST collections during the first half of 2025-26,” it said.
In terms of expenditure, total expenditure in the first half reached 36.4% of the budget estimate. The report said expenditure on capital projects increased by 32.3% compared to the same period in 2024-25.
Fiscal deficit for the state, whose budget is ₹4,09,549 crore for 2025-26, estimated at 2.95% of GSDP.