Pre-budget memo: Karnataka seeks Centre’s help to upgrade Bengaluru, Mysuru & Hubballi

Karnataka has pitched Bengaluru, Mysuru and Hubballi with the Centre for upgrades in housing, transportation and sanitation, ahead of the Union Budget 2025-26. The State has sought generous support from the Centre for the scheme it has proposed for the three cities.

Revenue Minister Krishna Byre Gowda presented a set of demands to Finance Minister Nirmala Sitharaman in the pre-budget meeting she chaired with state finance ministers at Jaisalmer in Rajasthan with state finance ministers.

Minister Gowda also requested speedy clearance from the Centre for the Mekedatu Project, to provide drinking water to Bengaluru and to generate 400 MW of power. He sought appraisal of the detailed project report (DPR) and other clearances.


The state’s memorandum urged the Centre to give coverage of Ayushman Bharat to 1.14 crore below-poverty line (BPL) families in Karnataka, aligning the programme with those covered under the National Food Security Act to ensure equitable health coverage.

The Ayushman Bharat excludes many families with a coverage limited to 69 lakh people as per the socio economic & caste census (SECC) data.

On social security pensions, the memorandum highlighted that the Centre’s contributions covered only 14.14 lakh beneficiaries out of 68.66 lakh supported by Karnataka. In the year 2023-24, Karnataka spent Rs 10,554 crore on social security pensions, while the Centre contributed a mere Rs 471 crore (4% of the total expenditure), the government said, while urging expansion of coverage and a long-overdue revision of Central contributions.

INCREASE PROFESSIONAL TAX LIMIT CAP
The state government has pressed for an amendment to Article 276 of the Constitution to increase the upper limit of Professional Tax (PT) from Rs. 2,500 to Rs. 6,000 per annum in line with economic growth and inflation.

The memorandum has asked for inclusion of cess and surcharge in divisible pool for equitable revenue sharing. “The share of cess and surcharge in gross tax revenue has risen from 8.1% in 2010-11 to 14% in 2024-25 (budget estimates), reducing Karnataka’s tax devolution.” Karnataka has also sought amending the GST Act to subsume the cess into State GST and empower the states to bridge post-GST revenue deficits effectively.

The state government has demanded immediate release of a state-specific grant of Rs. 6,000 crore, special grant of Rs. 5,495 crore and Rs 3,300 crore cumulative shortfall for ULBs, PRIs, health grants, and SDRF, all pending under the 15^th Finance Commission grants.

Karnataka’s electricity supply companies faced severe financial crises, the letter said, with the state seeking Central assistance through interest-free loans or soft loans.

The state also asked for an increase in central share under PMAY (Urban) to Rs. 5 lakh per beneficiary (from Rs. 1.5 lakh) and increase in Central share under PMAY (Grameen) to Rs. 3 lakh per beneficiary (from Rs. 72,000).

Karnataka has made a case for more railway lines, speeding up of projects, and for the Central support for 50% of land acquisition and 100% construction costs. The state also sought approvals for road infrastructure proposals, including new ring roads and upgrades to National Highways. The requested substantial support for Upper Bhadra, Upper Krishna (stage III), Mekedatu and Kalasa & Banduri Nala diversion projects.