Karnataka Politics: Inside Siddaramaiah’s economic model — welfare push, record revenues and excise reforms

Karnataka Chief Minister is likely to step down today, paving the way for his deputy, DK Shivakumar, to take over. The move could finally bring an end to months of speculation over a leadership change in the Congress government in Karnataka.

Siddaramaiah is Karnataka’s longest-serving CM. He is also the only chief minister of Karnataka after Devraj Urs to complete five years. was in the office for 1,829 days in his first term from 13 May 2013 to 15 May 2018.

In his second term, since 20 May 2023, he has completed over three years, 1105 days to be precise on Thursday, 28 May.

Devraj Urs served as a two-term chief minister, holding office for 2,113 days from 20 March 1972 to 31 December 1977, and for 679 days in his second term from 28 February 1978 to 7 January 1980.

Why is Siddaramaiah resigning?

At the core of the leadership tangle in Karnataka is Shivakumar’s demand that he be elevated to the chief minister’s post in accordance with a “promise” his supporters claim was made to him during the 2023 state .

The leadership tussle within the ruling party had intensified amid speculation about a possible change of chief minister after the Congress government completed the halfway mark of its five-year term on 20 November 2025.



Siddaramaiah hosted a breakfast meeting for his cabinet colleagues on Thursday morning. hugged the chief minister and even touched his feet. Siddaramaiah is learnt to have told the leaders that he would step down as chief minister today.

3 years of Siddaramaiah Govt

The economy of Karnataka is the 3rd-largest in India with a projected Gross State Domestic Product (GSDP) to reach 33.05 lakh crore (US $340 billion) for the at current prices, reflecting an annual growth rate of roughly 7 per cent.

In the last three years, Siddaramaiah’s economic policies have centered around social welfare push paired with strong macroeconomic growth and fiscal discipline. The Congress government has heavily prioritised a ‘pro-poor; Universal Basic Income model, funded by tax restructuring and robust state GDP growth, to balance economic expansion with social equity

The Congress government’s , while sustaining high economic growth and robust state revenues, has often sparked debates regarding social security spending versus long-term infrastructure investment

Last week, the chief minister said in a post on X that in the last three years, the Congress government has driven Karnataka’s economy with record revenues, strong GST growth, and bold policy reforms.

“From becoming one of India’s top-performing states in GST collections to introducing a global-standard strength-based excise system, Karnataka has focused on balancing economic expansion with responsible governance and public welfare. A stronger economy means stronger public investment, better infrastructure, and greater opportunities for every Kannadiga,” the chief minister wrote.

Karnataka is projected to collect a record 2,12,789 crore in own revenue in 2025-26, including 1,10,351 crore from Commercial Taxes and 40,1083 Crore from Excise, along with revenue from stamps and registration, motor vehicles, and non-tax sources.

The 5 Guarantees

At the heart of Siddaramaiah’s are five flagship guarantee schemes. These schemes played a key role in the Congress party’s victory in the 2023 Karnataka assembly elections, according to political analysts.

These five schemes are Anna Bhagya (free food grains), Griha Jyoti (free electricity), Griha Lakshmi (monthly cash transfers to women heads of households), Yuva Nidhi (stipends for unemployed youth), and Shakti (free public bus travel for women). Overall, these five schemes cost the state an annual budget outlay of over 51,000 crore, according to a rough estimate.

Supporters of the welfare schemes argue that by putting cash directly into the hands of the poor and middle class, the government aimed to combat inflation, increase purchasing power, and redistribute wealth upward.

On 27 July, the chief minister said the government had remained faithful to every electoral assurance made before the Assembly polls.

“We take pride in having acted exactly as promised before the elections. We have remained committed to every assurance given to the people of Karnataka and have successfully implemented all five guarantee schemes, taking them to every household,” he said.

Fiscal Management

The Karnataka government has managed to maintain the state’s fiscal deficit within mandated limits while posting strong macroeconomic figures.

As things stand, Karnataka has maintained one of the highest Goods and Services Tax (GST) collection rates in the country, contributing significantly to the state’s overall coffers.

Karnataka ranks second in India in , rising from 94,363 crore in 2023-23 to 1,02,586 crore in 2024-25 and 1,10,814 crore in 2025-25, according to official figures.

Excise reforms

One of the highlights of the Karnataka government has been a major reforms in the excise sector. This involves eliminating state intervention in alcohol pricing, shifting to a strength-based excise duty system, reducing tax slabs, and minimising bureaucratic red tape.

In a first in India, Karnataka has introduced a global-standard based on alcohol content, balancing revenue generation with public health concerns over alcohol consumption.

Workforce protections

Siddaramaiah’s policies also heavily focus on localised job creation and workforce protections.

The recently announced a historic 60 per cent hike in minimum wages, benefiting over one crore workers across 81 scheduled sectors, including unorganised labourers, e-commerce, private education, and hospitality. This landmark policy eliminates gender disparity and simplifies the state’s wage classification into three streamlined zones

Agriculture Policies

The state strengthened Agricultural Produce Market Committees (APMC) through increased budgetary outlays (exceeding Rs. 51,000 crore) and actively opposed privatisation models, resulting in record arrivals of agricultural produce.

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