The state government’s Resource Mobilization Committee (RMC) has recommended increasing user charges for government services and reforming tax structures to broaden the tax base, as well as reducing over-reliance on a few major sources.
It also recommended creating an economic policy wing within the Finance Department to monitor non-tax revenues and asset monetisation.
The report submitted to Chief Minister Siddaramaiah on Thursday recommended rationalising and increasing user charges in utilities, transitioning to volumetric billing with robust regulatory support and automatic indexation of user charges to inflation, unlocking revenue potential through scientific asset valuation, expanding leasing under public-private partnerships, and monetising urban land assets.
The committee, headed by retired IAS officer KP Krishnan, also suggested introducing auction-based digital licensing for excise, focusing on transparency and efficiency.
“Unlock revenue potential through scientific asset valuation, expanding leasing under public-private partnerships, and monetising urban land assets,” the report stated.
The RMC also recommended strengthening institutional capacity by building staff capabilities and periodic property surveys.
According to a statement issued by the government, the report underscores safeguarding growth-enhancing expenditures on infrastructure, education and health while improving expenditure efficiency. It calls for systematic reforms in revenue mobilisation to sustain Karnataka’s fiscal robustness and inclusive growth trajectory.
The report stated that Karnataka continues to show robust economic growth, outperforming many states in India. The state’s own tax revenue remains the backbone, forming about 60-70% of total revenue receipts, with significant contributions from commercial taxes, excise duties, and motor vehicle taxes.
Among the key challenges identified by the committee are: low non-tax revenue, especially from user charges and government assets, with substantial opportunities in leasing and monetisation lying untapped and challenges in local finance due to outdated guidance values and inadequate property tax revisions. It highlighted the need for better asset data management and systematic surveying of government properties.
The RMC was constituted in August 2024, aimed at strengthening the state’s fiscal health and sustainable economic growth. In the budget, the CM had stated that non-tax revenue as a percentage of GSDP and as a percentage of the own tax revenues have stagnated over the last few years.
