Not only are net borrowings of Karnataka increasing year on year, one of the biggest criticisms of the Siddaramaiah-led Budgets this term by the Opposition BJP, but debt repayment seems to have grown at alarming levels, data shows.

While borrowings increased from ₹1,16,000 crore in 2025-26 to ₹1,32,000 crore in 2026-27, registering a growth of 13.8%, repayment has shot up from ₹26,474 crore last year to ₹35,316 crore this year, a whopping 33.4% growth, outpacing the growth of increase in debt by nearly 2.5 times. “This underscores the importance of maintaining a balanced debt maturity structure to avoid refinancing risks,” the Medium Term Fiscal Plan (MTFP) said. 

Why anomaly

This anomaly is mainly because the maturity distribution of market borrowings shows a concentration in the short to medium-term segments. MTFP data shows 32.7% of debts in the 0-5 years category and another 37.4% in the 5-10 years category, even as 24.6% are in the 10 to 15 years category and only 5.3% in the more than 15 years category.  “To mitigate such risks, the borrowing strategy seeks to avoid bunching of repayments by spreading issuances across maturities”, MTFP says.

Further to avoid the ballooning of debt servicing year on year, the State has now decided to maintain a ceiling of repayments in a particular year to 1% of its projected GSDP of that particular year, in order to reduce the rollover risk and even out the repayment profile, MTFP says. 

“The steady rise in interest payments indicates the growing cost of debt servicing and reinforces the need for careful and efficient deployment of borrowed funds into productive capital assets that generate long-term economic returns,” MTFP says. 

For committed expenses

However, the fact that the State has been presenting revenue deficit budgets for four years now, indicates that debt is being deployed even to meet a part of committed expenditure as well.