Karnataka is preparing for its 2026-27 Budget while managing growing fiscal pressures. The State faces a ₹19,262 crore revenue deficit for 2025-26, which may rise due to GST rate changes. The fiscal deficit is estimated at ₹90,428 crore or 2.95% of the GSDP, just under the 3% legal limit. The government plans to balance spending cuts and boost revenues through taxes and levies. Revenue expenditure for 2025-26 stands at ₹3.11 lakh crore against receipts of ₹2.92 lakh crore, within a total Budget of ₹4.09 lakh crore. However, the State faces an additional ₹9,000 crore revenue shortfall from GST changes and ₹9,500 crore losses from non-shared cesses by the Centre. Credit rating agency ICRA reports Karnataka will borrow ₹93,000 crore from the market in the last quarter of 2025-26 — a record high and nearly double the borrowings in previous years’ quarters. So far, only ₹12,000 crore has been borrowed. Total borrowings are budgeted at ₹1,16,000 crore, about 28% of the Budget. Opposition Leader R. Ashok criticized CM Siddaramaiah, calling him the "Biggest Borrowing CM" amid rising debt concerns. However, Siddaramaiah's economic adviser Basavaraj Rayareddy says this borrowing strategy is "a deliberate move to minimise the interest burden" on the State. With welfare and guarantee scheme costs rising, the upcoming Budget will require careful balance to maintain financial discipline while supporting growth and development. The Union Budget due on February 1, 2026, may impact Karnataka’s fiscal planning through central grants and transfers.