The study examines the land use pattern and dynamics of annual shifts among different land use categories in Karnataka for a period from 1980-81 to 2007-08. There was a marginal increase in share of forest area from 15.92 per cent in 1980-81 to 16.13 per cent in 2007-08, which is far below the norms set under the National Forest Policy (1952) envisaging about one-third of the geographical area under forest for ecological regions. Annual rate of change was employed to arrive at meaningful results. The unfavorable increasing trends in the area put to non-agricultural uses have serious implications on ecological balance. Study noticed the operation of vicious circle of land use dynamics within the agricultural sector. The ecological sector has decreased substantially at an annual rate of 16,070 hectares of which the share of desirable ecology was 90.55 per cent while, the share of undesirable ecological sector was 9.45 per cent. Inter- sectoral budgeting revealed that area shifts have been occurring from both desirable and undesirable ecological sector towards the agricultural as well as non-agricultural sectors which needs to be checked.