Karnataka civic bodies hit as untied grants crash 87%

Karnataka's 327 urban local bodies (ULBs) face a severe fund crunch after the state government released only Rs 4,972 crore of the fifth State Finance Commission's recommended Rs 34,052 crore for 2026-27. According to urban governance think tank Janaagraha's report, untied grants, funds that civic bodies can use for local priorities like roads and streetlights, have plummeted by nearly 87%. Mysuru's untied allocation fell from Rs 43 crore in 2014-15 to Rs 3 crore, while Hubballi-Dharwad's dropped from Rs 47 crore to Rs 3 crore in the same period.

Janaagraha senior advisor Santosh Nargund said Karnataka, once a pioneer in fiscal decentralisation, now ranks last among comparable states in per capita grants to cities, allocating Rs 2,244 per person compared to Kerala's Rs 6,251. Former mayor of Hubballi-Dharwad Iresh Anchatgeri said the corporation needs Rs 2,000 crore for underground drainage works but receives only Rs 1-2 crore in untied funds. The government has diverted substantial funds to welfare schemes like Anna Bhagya and parastatals.

Urban development department secretary Cauvery B B argued the decline is due to policy changes and budgeting methodology, not a proportional reduction in support. She said allocations consider the state's fiscal position and statutory commitments. Over 200 ULBs lack elected councils, which may jeopardise access to the 16th Finance Commission's Rs 18,483 crore urban grants. Bengaluru alone lost Rs 964 crore under the 15th Finance Commission due to having no elected body.