INTRODUCTION – KEY HIGHLIGHTS
|
Indicator |
2024–25 (RE) |
2025–26 (BE) |
Remarks |
|
Fiscal Deficit (% of GSDP) |
2.90% |
2.95% |
Within FRBM limit (3%) |
|
Legal Framework |
Karnataka Fiscal Responsibility Act, 2002 |
— |
Ensures fiscal discipline |
|
Approach |
Growth + Fiscal Prudence |
— |
Balanced strategy |
KEY TAKEAWAYS
Karnataka maintains fiscal deficit < 3% → important prelim fact
Focus on:
· Productive expenditure
· Revenue mobilisation
· Macroeconomic stability
FISCAL CONSOLIDATION
Core Facts
|
Aspect |
Details |
|
Fiscal deficit norm |
< 3% of GSDP (KFRA) |
|
Public debt |
Contained within 25% of GSDP |
|
Revenue balance |
Mostly revenue surplus historically |
|
2025–26 deficit target |
2.95% (below 4% allowed by 15th FC) |
EXCEPTIONAL DEVIATIONS (VERY IMPORTANT)
|
Year |
Reason |
Deficit |
|
2009–10 |
Global Financial Crisis |
3.24% |
|
2020–21 |
COVID |
3.72% |
|
2021–22 |
COVID |
3.84% |
👉 Mains Insight: Deviations show counter-cyclical fiscal policy, not fiscal indiscipline.
⚠️EMERGING CONCERN
Revenue deficit (2025–26): 0.6% of GSDP
Reasons:
· End of GST compensation (post-2023)
· Reduced Finance Commission transfers
👉 Mains Angle: Structural weakening of revenue side → fiscal stress risk.
STATE FINANCES
📊 TRENDS IN RECEIPTS & EXPENDITURE
|
Category |
2020–21 |
2025–26 |
Growth |
|
Capital Receipts |
₹84,843 Cr |
₹1,16,170 Cr |
+36.92% |
|
Capital Expenditure |
₹59,091 Cr |
₹97,810 Cr |
+65.52% |
🧠 KEY INSIGHTS
Higher growth in capital expenditure → positive for:
· Infrastructure
· Long-term growth
· State avoids cutting capital expenditure even during revenue stress → quality spending