Revenue Growth and Expenditure Priorities in Karnataka: Trends in State Finances and Implications for Inclusive Growth

The fiscal capacity of state governments plays a crucial role in promoting economic growth, social development and inclusive welfare. Karnataka has experienced substantial changes in revenue mobilisation, capital receipts and public expenditure over the period 2011–12 to 2025–26. This paper examines the trends in the state’s revenue and capital receipts and the composition of developmental and non-developmental expenditure using secondary data published in the Karnataka Economic Survey 2025–26. The paper argues that strengthening revenue mobilisation, improving expenditure efficiency and protecting growth-enhancing investments are essential for sustainable and inclusive development. The study also identifies inconsistencies in selected expenditure-table totals that require verification before definitive fiscal conclusions can be drawn.