Capex slows as committed expenses balloon and revenue takes a hit

The Karnataka government faces a balancing act between ballooning committed expenditure and reduced revenue receipts. Capital expenditure growth is expected to be slow in 2026-2027 due to pressure on revenue receipts, with the state aiming to increase its own tax revenue and borrowing to fund capital projects. The government anticipates ₹3.15 lakh crore in revenue receipts, including a potential boost from mining sector revenue if the President approves the Karnataka (Mineral Rights and Mineral Bearing Land) Tax Bill, 2024. However, revenue deficit is projected to remain around until 2029-2030 due to reduced revenue flow caused by GST rationalization.