Karnataka plans record ₹93,000 crore loan in Q4

Karnataka to borrow ₹93,000 crore in Q4, India’s biggest state loan haul; total fiscal borrowings rise 160% to ₹1.16 lakh crore

Karnataka is preparing for India’s largest borrowing in a single quarter, with plans to raise ₹93,000 crore from the open market between January and March 2026. Data from the Reserve Bank of India indicates this is the highest borrowing figure for any state in the final quarter of a financial year. The state is expected to borrow around ₹31,000 crore per month during this period to meet fiscal requirements.

Until December, Karnataka had borrowed a relatively modest ₹12,000 crore, according to credit rating agency ICRA. However, the need to fund welfare₹1.16 lakh crore. The borrowed funds will be used both to repay outstanding loans and to finance ongoing development works.

Nationally, Indian states together plan to borrow ₹4.99 lakh crore in the fourth quarter, with Karnataka alone accounting for nearly 19% of this total. Analysts point out that Karnataka’s borrowing pattern is unique, as the state tends to raise most of its annual debt in the last quarter. Strong cash flows in the earlier quarters allow it to delay borrowing until later in the year, unlike other states that spread borrowings more evenly.

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Of the ₹1.16 lakh crore planned for the current fiscal, ₹1.05 lakh crore will come from the open market, while the remainder will be sourced from multilateral development banks. Typically, the first two quarters are spent on approvals and tendering, with execution of projects beginning in the third quarter. This results in expenditure peaking in the final quarter, despite efforts by the finance department to distribute spending more evenly.

Public finance experts remain divided on the approach. Some argue that the concentration of borrowing in the last quarter reflects efficient cash management, while others believe it signals poor planning and fiscal pressure. Regardless of differing opinions, Karnataka’s Q4 borrowing strategy underscores the financial weight of welfare commitments and infrastructure expansion, making it the most aggressive loan haul by any Indian state this year.

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