Experts, activists demand formula-based allocation of State govt. grants in Budget; govt. says it will be ‘need based’

As preparations begin for the State Budget for 2026-27, likely to be presented in mid-February, it is being keenly watched as to how the capital grants from the State government will be allocated between the five city corporations in Bengaluru.

This is the first Budget after the city’s governance has been restructured. While urban experts and activists have been advocating for a formula-based distribution of funds setting a good precedent in the first year itself, the State government will likely go for a discretionary ad-hoc allocation.

The five city corporations have a wide variance in their revenue generation potential with the East Corporation expected to generate ₹912 crore and the North Corporation expected to generate ₹543 crore. The State government has repeatedly said that it would use its grants to bring parity between the corporations. However, there is no concrete answer on what basis these allotments would be made apart from ‘more grants to corporations with less revenue and less to corporations which have a better property tax base’.

A senior official said that the allocations to the various city corporations will be ‘need based’, taking into account pending, ongoing, and proposed new projects.

Clause dropped

The Brand Bengaluru Committee in its draft of the Greater Bengaluru Governance Bill submitted to the State government in July 2024, provided for a Finance Advisory Committee to the Greater Bengaluru Authority (GBA) ‘to help the corporations become financially sustainable and to make recommendations regarding how additional State grants-in-aid are to be distributed between the Municipal Corporations’. However, this provision was dropped in the Greater Bengaluru Governance Act, 2024.

Formula-based allocation need of the hour

Srikanth Vishwanathan, CEO, Janaagraha Centre for Citizenship and Democracy, said, “A discretionary process, neither anchored in data nor in the voice of citizens, would be self-defeating. The GBA should put in place a basic scaffolding this year itself.” 

Many have also argued for years now that the State should also devolve taxes to the local bodies based on a formula and the city should get a share, however small, of Goods and Services Taxes, Entertainment Tax, Motor Vehicle Tax and Stamps and Registration revenue, generated in the city.  

N.S. Mukunda of Bengaluru Praja Vedike, advocated for developing a ward level index accounting for infrastructure and human development indices, to guide allocation both from the State government to the five corporations and within these corporations to wards as well. “After we have elected councils in these corporations, we will invariably get into situations where the State government and a particular corporation will have opposing parties in power, and there will be allegations of partisanship. A party trying to perpetuate this system today for some short term gains will also be at its receiving end in the future. In the process, the city will suffer,” he said. 

Bengaluru NavaNirmana Party, gearing up to fight the upcoming civic polls in the city, has also demanded for a formula-based allocation that is transparent as well. “We need a formula-based allocation, an independent commission of experts to arrive at the formula and for the entire process to be transparent,” said Srikanth Narasimhan of the party.