The subsidies bill of Karnataka has gone up by a whopping ₹9,200 crore in Budget Estimates (BE) for the year 2026-27 compared to BE 2025-26.

Budget documents issued by the State government on Friday shows it went up from ₹93,943.20 crore in BE 2025-26 to ₹1,03,143.77 crore in BE 2026-27. This even as the five guarantees bill, pegged at ₹51,286 crore, is almost same as the previous two years, indicating the subsidy bill being driven up north because of other schemes. The rise is driven by Energy, Finance, Revenue, Transport and Agriculture and Horticulture Departments. 

The Medium Term Fiscal Plan (MTFP) Report tabled on Friday attributes this rise to “both expansion in beneficiary coverage and upward revision of benefit levels under major welfare schemes”.

 “While such expenditures advance important equity and social objectives, they also place sustained pressure on the revenue account by increasing the share of committed expenditure,” it cautions.

It further quotes 16th Finance Commission Report, which it said “cautions that rising subsidy outlays, if not periodically assessed, can constrain fiscal space and affect expenditure quality. The Commission underscores the need for improved transparency in accounting, sharper beneficiary targeting, outcome-based evaluation, and avoidance of open-ended commitments”. 

MTFP recommends “structured review mechanisms, improved targeting through technology, and clearly defined reassessment or sunset provisions can help preserve fiscal balance while continuing to support vulnerable sections”.