Budget headache
BENGALURU
Chief Minister Siddaramaiah has begun preparations for presenting the 2026–27 state budget, expected in March, with departmental budget meetings likely to commence next week. The Congress government, now in power for over two and a half years, is grappling with the ongoing financial pressures of the Pancha Guarantees, which have already placed a heavy burden on the state’s finances.
For the 2026–27 fiscal year, the government faces three additional major financial challenges that further complicate budget planning. These include the relief expenditure for the Krishna Upper River Project Phase-3, the financial demands of the G Ram Ji Project, and the significant revenue shortfall resulting from GST rate simplification. Collectively, these new obligations, on top of the existing Pancha Guarantee commitments, have become a formidable constraint on state finances.
The revenue loss from GST rate simplification is particularly concerning, as the state heavily depends on GST collections for its income. The lower rates have led to a substantial reduction in projected revenue, intensifying the challenge of balancing expenditure with available resources. Financing these new commitments, while continuing to meet the promises under the five guarantees, has emerged as a major hurdle for Chief Minister Siddaramaiah and his administration.
Officials indicate that the government will need to carefully prioritize spending and explore measures to manage revenue shortfalls effectively. Amid rising financial pressures, the 2026–27 budget is expected to be tightly calculated, balancing developmental needs, project obligations, and the state’s fiscal stability. The additional financial burdens underscore the complex fiscal scenario the Congress government faces in the upcoming budget.
