March 7, 2025, Karnataka’s Chief Minister Siddaramaiah, who also serves as the state’s Finance Minister, presented the much-anticipated budget for the fiscal year 2025-26. This occasion marked his 16th budget presentation, underscoring his extensive experience in state governance. The budget, pegged at an unprecedented ₹4 lakh crore, reflects a significant increase from the previous year’s ₹3.71 lakh crore, signaling the government’s intent to bolster both infrastructure and social welfare initiatives.
In the lead-up to the budget announcement, Chief Minister Siddaramaiah emphasized the inclusive approach adopted in its formulation. He highlighted consultations with a diverse array of stakeholders, including cabinet ministers, senior officials, farmers, representatives of backward classes, minority groups, and religious leaders. This collaborative effort aimed to ensure that the budget addresses the aspirations and needs of all segments of Karnataka’s populace. In a message shared on social media platform ‘X’, Siddaramaiah stated, “Over the past few days, I have held meetings with our cabinet ministers; senior officials of various departments; leaders of farmers, exploited, minority, backward class organizations; and religious leaders.”
A cornerstone of the budget is the substantial allocation towards the state’s five guarantee schemes, which are pivotal to the government’s social welfare agenda. In the previous fiscal year, these schemes received ₹52,000 crore, underscoring the administration’s commitment to uplifting marginalized and vulnerable communities. Despite prevailing financial constraints, the government has indicated that it does not intend to scale down social spending, reaffirming its dedication to inclusive growth.
The budget also addresses the pressing issue of drought, which has severely impacted Karnataka in recent times. In the 2023-24 period, the state declared drought in 223 taluks, leading to significant agricultural distress. The government has proactively sought assistance from the central administration, submitting multiple memorandums requesting ₹18,171 crore to provide relief to affected farmers. However, in light of the central government’s limited response, the state has independently initiated several drought mitigation measures. These include allocating ₹629 crore for input subsidies benefiting 33.19 lakh farmers, distributing mini fodder kits at a cost of ₹20 crore, investing ₹200 crore to enhance groundwater levels under the Krishi Bhagya scheme, and undertaking water conservation projects worth ₹100 crore through the Minor Irrigation Department. Collectively, these initiatives represent a ₹500 crore commitment from the State Disaster Relief Fund for the current year.
Tourism emerges as a significant focus area in the budget, with the government unveiling a revised Tourism Policy for 2024-2029. This policy aims to attract a greater number of tourists and investors to Karnataka. Key initiatives under this policy include the establishment of cable car ropeways at ten tourist destinations through public-private partnerships to promote adventure tourism. Additionally, the government plans to collaborate with the Archaeological Survey of India to research and restore archaeological sites in Nagavi, Kalaburagi district, believed to be Karnataka’s first university from the Rashtrakuta era. Efforts to revive the ancient ‘Karez’ water supply systems in Bidar and Vijayapura districts are also on the agenda, with an allocation of ₹15 crore. Furthermore, to bolster eco-tourism, interpretation centers are set to be established in Bandipur, Dandeli, and Kabini at a cost of ₹25 crore, with additional eco-tourism development planned for Kapatagudda.
The budget places a strong emphasis on advancing the Information Technology, Biotechnology, and Science and Technology sectors. Notable projects include the establishment of a Science City in Bengaluru in collaboration with the central government, with a total investment of ₹233 crore. Plans are also underway to set up new science centers and planetariums in Shimoga, Raichur, Chikmagalur, Yadgiri, and Mysuru, supported by central assistance, with ₹170 crore earmarked for these developments in the current year. To stimulate growth in the animation, visual effects, gaming, and comics sectors, the state will launch the AVGC-XR Policy 3.0 for 2024-2029, aiming to generate 30,000 new high-quality jobs and attract ₹150 crore in new investments. Further, the Karnataka Innovation and Technology Society (KITS), in collaboration with KEONICS, will establish Skilling & Innovation Centers in emerging technologies across Kalaburagi, Shivamogga, Hubbali, and Tumakuru, with a budget of ₹12 crore. A Center of Excellence in Fintech, Spacetech, and Automotive Tech is also planned, with an investment of ₹10 crore over five years, in partnership with entrepreneurs and educational institutions. Additionally, a Knowledge, Health Care, Innovation, and Research City (KHIR) is proposed to be developed on 2,000 acres near Bengaluru.
In a move to promote sustainable transportation, the Karnataka government has announced plans to implement tax waivers and financial incentives to boost the clean mobility sector. This includes a significant reduction in taxes for hybrid vehicles, particularly benefiting manufacturers like Toyota, which has been advocating for such incentives. The proposal entails abolishing road tax and registration charges for hybrid cars priced under $30,000, a reduction from the existing 13% to 18% tax rate. While India has traditionally prioritized exemptions for electric vehicles, Karnataka’s policy aims to encourage the adoption of a broader range of clean mobility options, including hybrids and hydrogen-based vehicles. The state also intends to offer incentives ranging from 15% to 25% of investments to manufacturers of electric vehicles, their components, battery components, or EV charging equipment, aiming to attract $6 billion in new investments through this policy.
Furthermore, Karnataka has set an ambitious goal to double the number of Global
