The Karnataka government has urged the Union government to define state-wise allocations more clearly in the Union Budget to facilitate realistic planning for Centrally Sponsored Schemes (CSS). During the Pre-Budget meeting for 2025-26, held on Thursday, January 30,Karnataka’s Revenue Minister Krishna Byregowda presented a detailed memorandum to Union Finance Minister Nirmala Sitharaman, outlining key fiscal concerns and requesting increased Union support for critical developmental initiatives.
A primary concern raised by Karnataka was the implementation of CSS under the Single Nodal Agency-Scheme for the Advancement of Public Health Research System (SNA SPARSH) model, which directly routes funds to implementing agencies, bypassing state legislatures. The state argued that this system undermines financial accountability and called for routing funds through the State Consolidated Fund to ensure greater transparency. Karnataka also recommended shifting from a reimbursement-based scheme to an advance-release model to reduce financial strain on the state.
The Karnataka government highlighted concerns over inadequate Union contributions toward honorariums for Anganwadi and ASHA workers. While Karnataka currently pays Rs. 7,300 and Rs. 5,000 per month, respectively, the Union government’s contribution remains significantly lower at Rs. 2,300 and Rs. 2,000. The state proposed increasing the Union share to Rs. 5,000 for ASHA workers and Rs. 2,000 for Anganwadi helpers to ensure fair compensation.
On social security pensions, Karnataka pointed out a major funding gap. The state currently supports 68.66 lakh beneficiaries, but the Union government contributes only for 14.14 lakh. In the 2023-24 fiscal year, Karnataka spent Rs. 10,554 crore on pensions, with the Union’s share at just Rs. 471 crore—only 4% of the total expenditure. The state called for an urgent revision in the Union's contributions to better support pensioners.
Karnataka urged the Union government to align Ayushman Bharat coverage with the National Food Security Act (NFSA), noting that the scheme currently covers only 69 lakh families based on outdated SECC data, whereas 1.14 crore families are eligible under NFSA. The state emphasized the need for updated data inclusion to ensure broader healthcare coverage.
The state government demanded the immediate release of Rs. 6,000 crore in state-specific grants and Rs. 5,495 crore in special grants under the 15th Finance Commission. It also highlighted a cumulative shortfall of Rs. 3,300 crore affecting Urban Local Bodies (ULBs), Panchayat Raj Institutions (PRIs), health grants, and the State Disaster Response Fund (SDRF).
The state also expressed concerns over fiscal devolution, pointing out that the share of Cess and Surcharge in Gross Tax Revenue has increased from 8.1% in 2010-11 to 14% in 2024-25, reducing the state’s tax devolution. The state urged the inclusion of these levies in the divisible pool for fair revenue sharing and proposed integrating the Compensation Cess into State GST (SGST) to provide states with greater fiscal autonomy.
For urban development, Karnataka sought enhanced Union support, including an increase in the Central share under PMAY (Urban) from Rs. 1.5 lakh to Rs. 5 lakh per beneficiary and under PMAY (Grameen) from Rs. 72,000 to Rs. 3 lakh. The state also called for funding for major railway and road infrastructure projects, including new railway lines, ring roads, and highway upgrades.
Karnataka urged the Centre to recognize the Upper Bhadra and Upper Krishna Stage-III projects as National Projects and release Rs. 5,300 crore for the Upper Bhadra Project, as announced in the Union Budget 2022-23. It also sought necessary clearances for the Mekedatu Project, which aims to provide drinking water to Bengaluru and generate 400 MW of power.
The state requested special grants for the Kalyana Karnataka and Western Ghats regions to address disparities in education, healthcare, and infrastructure. It proposed an allocation of Rs. 10,000 crore over five years for the Western Ghats to support sustainable development and disaster resilience.
Karnataka sought a revision of the Professional Tax limit under Article 276 of the Constitution, recommending an increase from Rs. 2,500 to Rs. 6,000 per annum to align with economic growth. Additionally, the state requested interest-free or soft loans for financially struggling power distribution companies (DISCOMs) to ensure stable electricity supply and economic growth.
On disaster management, Karnataka called for a transparent and need-based SDRF allocation, urging timely fund releases given the state’s vulnerability to natural calamities. The government emphasized the importance of predictable and adequate funding to manage disasters effectively.