Bengaluru: The demonetisation exercise caused "great" distress to people and hit the state's revenues from stamps and registration, causing a shortfall of Rs 1,350 crore during 2016-17, said Chief Minister Siddaramaiah today.

Questioning the need and rational of demonetisation, Siddaramaiah, in his budget speech for 2017-18, told the assembly that the Centre was yet to disclose its outcome.

The banks were simply not geared up for this step and the manner of its implementation 'exposed' the Union government's lack of preparedness, said Siddaramaiah, who also holds the finance ministry portfolio.

The chief minister added the RBI should have foreseen the people's hardships due to demonetisation of Rs 500 and Rs 1,000 currency notes and taken steps to mitigate them.

"The entire cooperative sector crucial for serving farmers and rural folk, came to a stop," he added.

This is the 12th budget presented by Siddaramaiah as finance minister in his political career during which he had served under the ministries of H D Deve Gowda and J H Patel.

Siddaramaiah said demonetisation of large currency notes had a major adverse impact on generation of revenue from stamps and registration accounts making the state expect a shortfall of almost Rs 1,350 crore against the 2016-17 target of Rs 9,100 crore and collect merely Rs 7,750 crore by March end.

The revenue target for 2016-17 took a major hit due to demonetisation with registration of various documents like sale deed etc decreasing by 25 per cent.

"As a result, we expect a shortfall of almost Rs 1,350 crore and expect to achieve Rs 7,750 crore by March end," he said.

"The revenue collection target for 2017-18 is fixed at Rs 9,000 crore, compared to Rs 9,100 crore fixed for the year 2016-17," Siddaramaiah said.

The government has decided to rationalise Article 37 in the schedule of the Karnataka Stamp Act 1957 to boost tax collection and also tweak Article 20 (4) of the Companies Act in respect of amalgamation of companies, Siddaramaiah said.