The State government, which juggled with the implementation of guarantee schemes and a huge revenue deficit in the 2024-2025 fiscal, is expected to see a shortfall of around ₹6,000 crore in the revenue receipts at the end of fiscal.
According to government sources, the Excise Department alone is expected to miss the target of ₹38,000 crore by about ₹2,000 crore, while the Stamps and Registration Department is expected to miss the target by ₹1,000 crore.
The other tax revenues, including land revenue, electricity taxes, and taxes and duties, has dropped from ₹4,245 crore in 2023-2024 to ₹2,368 crore in 2024-2025.
The commercial taxes have also done badly in January and February, sources pointed out. While the agriculture and services sector have reported increased growth, the industrial sector, comprising mining, manufacturing, construction and utilities, is expected to to grow at 5.8% in 2024-2025, lower than 7.3% in 2023-2024.
Reduced consumption
Overall, government sources said: “Economy in the country is slowing down. The excise duty collection missing the target is due to drop in consumption of alcohol, which is also a country-wide phenomenon. Good excise duty collection here is not because of sales but due to taxation.”
Another reason for reduced excise duty collection was change in the excise policy in Andhra Pradesh, which has curtailed the movement of liquor from Karnataka. “In slabs for cheaper liquor, Karnataka’s liquor is cheaper than Andhra Pradesh and Telangana, and there was a lot of cross-border sale of liquor. The new policy of auctioning areas to private individuals in neighbouring States have tightened the movement.”
The Stamps and Registration Department’s collection also went down due to the recent DDoS attack, sources said, adding that the registrations were disrupted.
Surplus projected in 2027-2028
The revenue deficit, which is now revised at ₹26,127 crore from ₹27,353 crore for 2024-2025, has been pegged at ₹19,262 crore for 2025-2026.
Though Chief Minister Siddaramaiah hoped to overcome revenue deficit by next year, the officials said that with the current growth rate, the revenue deficit is not expected to be turned around to revenue surplus budget till 2027-2028. A finance official said that considering the growth rate of revenue receipts at 11.3% against a 7.3% growth rate of revenue expenditure, the revenue deficit could remain till 2027-2028. “There has been some control on expenditure while revenue has increased.”
Though funding of guarantees of nearly ₹52,000 crore has led to pressure on expenditure, the government, however, has blamed stoppage of GST compensation from 2023-2024 and reduction in horizontal devolution by 23% during the 15th Finance Commission, which results in an estimated loss of ₹12,000 crore for the State to become revenue deficit.
Adding to this, the implementation of the 7th Pay Commission has resulted in an additional financial burden of ₹19,401 crore to the State exchequer, the Budget said. This has played a key role in inflating the revenue expenditure from ₹2,83,928 crore as per revised estimates of 2024-25 to ₹3,11,739 crore in 2025-26.
Published – March 07, 2025 09:41 pm IST
