Karnataka civic bodies hit by 87% decline in untied grants

The Karnataka government has released only 14.6% of the urban allocation recommended by the fifth State Finance Commission for 2026-27, according to a report by Janaagraha. Untied grants to urban local bodies have declined by 87%, leaving Rs 75 crore against the recommended Rs 5,790 crore.

Cities like Mysuru, Hubballi-Dharwad, and Mangaluru saw sharp drops in untied grants, limiting their ability to fund local infrastructure. Former mayors said tied funds restrict flexibility, forcing dependence on loans for projects like drinking water supply. Karnataka ranks last among comparable states in per capita SFC grants to cities.

Over 200 urban local bodies are without elected councils, jeopardising access to central finance commission grants worth Rs 18,483 crore. The state government attributed the decline to budgeting methodology and fiscal constraints, but critics say the reversal undermines fiscal decentralisation.