Karnataka’s severe drought could reduce the state’s GST collections after crop losses estimated at around Rs 46,000 crore across 177 drought-hit taluks, Deputy Chief Minister G Parameshwara said on Monday. The state has sought approximately Rs 10,000-11,000 crore in relief from the Centre as Central teams assess the situation.
Parameshwara, who also holds the Revenue portfolio, said the drought’s financial impact would extend beyond agriculture. “Karnataka is facing a drought of a severity not seen before. Its impact will certainly be felt across sectors, including GST collection,” he told reporters in Bengaluru.
The Deputy Chief Minister said Karnataka had consistently ranked second among states in GST collection and had highlighted this position at GST Council meetings. However, he said crop losses and the wider economic effects of the drought could reduce consumption and business activity, affecting revenue collections.
“The state is now facing drought and crop losses. This will impact all sectors. Financial experts have already indicated that GST collections may naturally decline as a result,” Parameshwara said. He added that the full extent of the impact would become clear in the coming days.
The state government has maintained what Parameshwara described as the necessary financial buffer and is examining measures to improve GST collection. The comments come as Karnataka seeks additional central assistance to manage the consequences of the drought and protect its finances during a period of lower economic activity in affected areas.
Central teams began visiting Karnataka on October 3 to assess conditions in 101 taluks that were declared drought-hit in the first phase. The state has also declared another 77 taluks drought-affected. According to Parameshwara, the teams were asked to visit these areas as well after he and Chief Minister Siddaramaiah briefed them on the situation.
The teams have interacted with farmers and visited agricultural fields in several districts. Their assessment was expected to be completed by Monday or Tuesday, after which a report would be submitted to the Union government. A decision on Karnataka’s relief demand will follow that report, Parameshwara said.
The state’s estimate of Rs 46,000 crore in losses covers all 177 drought-hit taluks. Karnataka has placed its request for Rs 10,000-11,000 crore in relief before the Central assessment teams. Parameshwara also said that he and the Chief Minister were considering leading a delegation to the Centre after the final memorandum is submitted.
The drought assessment will determine the basis for the Centre’s response, while the state government will continue examining its own revenue position. Parameshwara said the government would review the situation as the impact on GST collections becomes clearer and would pursue the relief request after the Central teams submit their report.
