Karnataka is set to lose about ₹10,000 to ₹15,000 crore due to 16th FC’s recommendation, says Siddaramaiah

Chief Minister Siddaramaiah on Sunday said that Karnataka is set to lose ₹10,000 crore to ₹15,000 crore annually due to the 16th Finance Commission fixing the State’s share of divisible taxes at 4.13%.

While the total share goes up from 3.64% in the 15th Finance Commission, the 16th Finance Commission’s recommendation is still less than that of the 14th Finance Commission, which fixed the share at 4.71%, the Chief Minister said.

“This is a highly disappointing Budget and an equally disturbing outcome of the Finance Commission’s recommendations. Karnataka’s share of divisible taxes has been reduced to 4.131%, down sharply from 4.71 % under the 14th Finance Commission. This is not an isolated decision but part of a consistent pattern of sidelining Karnataka despite its strong economic contribution to the national exchequer. This will affect the State’s capacity to invest in welfare, infrastructure, irrigation, and development,” the Chief Minister told presspersons in Kalaburagi, offering his reaction on the 2026-2027 Union Budget.

“When Karnataka’s share in the divisible pool of central taxes fell from 4.71% under the 14th Finance Commission to 3.64% under the 15th Finance Commission, the estimated loss was over 23% in revenue,” he pointed out.

“Karnataka has been handed nothing, just the usual empty pot. Not only Karnataka, the entire South (India) has been ignored,” Mr. Siddaramaiah said, describing it as a “corporate-style Budget” filled with statements but devoid of concrete plans, allocations, or long-term direction.

Expressing disappointment, Mr. Siddaramaiah said that the Union government has chosen to retain devolution at 41% without acknowledging the steadily increasing fiscal responsibilities of States. “We had legitimately expected the States share to be increased to 50% as a matter of fairness and cooperative federalism. “Despite Karnataka’s strong contribution to the national GDP and tax kitty, fiscal justice has repeatedly been denied,” he said, adding that the State’s long-pending demands for a fairer devolution formula had been ignored.

He alleged that while the Centre claims to have marginally improved tax devolution, Karnataka had been severely disadvantaged in allocations under the State and National Disaster Response Funds, with far lower grants compared to States such as Maharashtra, Uttar Pradesh, and Madhya Pradesh. Mr. Siddaramaiah criticised the reduction in allocations to States under Centrally Sponsored Schemes, noting that the promised ₹5.41 lakh crore in the 2025-2026 Budget had been cut to ₹4.2 lakh crore in the revised estimates, a shortfall of ₹1.21 lakh crore. “This directly affects States like Karnataka, which depend on these transfers for development programmes,” he said.

Mr. Siddaramaiah pointed out that Karnataka is owed a pending share of ₹13,004 crore under the Jal Jeevan Mission.

 “Overall, this Budget holds no significance from Karnataka’s perspective. Big promises have been made, but without matching funds. It is a Budget without vision, without fairness and without justice to States that contribute substantially to the national economy,” he said.

Taking exception on proposal on rare earth materials, the Chief Minister said: “It was unfortunate that Karnataka has been completely ignored in the proposed rare earth corridors despite having known deposits of rare earth minerals in regions such as Chamarajanagar and others parts of the State.

Highspeed corridor

Chief Minister Siddaramaiah said that the genuine requirement of the State was Bengaluru-Mumbai or Bengaluru-Pune or Bengaluru-Mangaluru highspeed corridor that would have integrated technology, finance, manufacturing, and global trade to benefit Karnataka. “The proposed Bengaluru-Hyderabad and Bengaluru-Chennai high-speed corridor will mostly benefit Telangana, Andhra Pradesh and Tamil Nadu by giving them faster access to Bengaluru’s economic ecosystem,” he said.