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

Karnataka faces a potential annual loss of ₹10,000 to ₹15,000 crore due to the 16th Finance Commission's tax allocation recommendations.

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.