Fri Mar 07 16:11:28 UTC 2025: ## Karnataka Faces ₹6,000 Crore Revenue Shortfall

**Bengaluru, March 7, 2025** – The Karnataka state government is facing a significant revenue shortfall of approximately ₹6,000 crore at the end of the 2024-2025 fiscal year. This comes amidst the implementation of several guarantee schemes and a pre-existing large revenue deficit.

Key contributing factors to the shortfall include:

* **Excise Department:** A shortfall of ₹2,000 crore, primarily attributed to a decrease in alcohol consumption nationwide and changes in Andhra Pradesh’s excise policy that have reduced cross-border liquor sales.
* **Stamps and Registration Department:** A ₹1,000 crore shortfall, partly due to a recent DDoS attack disrupting registrations.
* **Other Tax Revenues:** A significant drop from ₹4,245 crore in 2023-2024 to ₹2,368 crore in 2024-2025, encompassing land revenue, electricity taxes, and other duties. Poor performance in commercial taxes during January and February further exacerbated the situation.

While the agriculture and services sectors showed growth, the industrial sector’s growth rate is projected to be lower than expected (5.8% compared to 7.3% in the previous year).

The revised revenue deficit for 2024-2025 stands at ₹26,127 crore, with projections of ₹19,262 crore for 2025-2026. Government officials anticipate the deficit to persist until 2027-2028, despite efforts to control expenditure and increase revenue.

The government attributes the shortfall partly to the cessation of GST compensation since 2023-2024, a 23% reduction in horizontal devolution from the 15th Finance Commission (resulting in an estimated ₹12,000 crore loss), and the additional financial burden of ₹19,401 crore from the implementation of the 7th Pay Commission. Funding of approximately ₹52,000 crore in guarantee schemes has also put pressure on expenditure. Despite the Chief Minister’s optimism, the current growth rate does not indicate a return to a surplus budget before 2027-2028.

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