Ahead of the Union Budget 2025-26 presentation, Karnataka and Kerala submitted a slew of demands and suggestions to the central government during pre-budget consultations. Both states sought special grants, infrastructure support, and measures to stimulate economic growth.
Union Finance Minister Nirmala Sitharaman met with finance ministers of states and union territories last month to gather inputs for the budget, which is set to be presented tomorrow, on February 1.
KARNATAKA’S DEMANDS
Karnataka, represented by Revenue Minister Krishna Byre Gowda, urged the Centre to release Rs 5,300 crore promised for the Upper Bhadra project, aimed at providing water to drought-prone regions of central Karnataka. The state also sought special matching grants for the development of the backward Kalyana Karnataka region and the ecologically sensitive Western Ghats.
Highlighting the need for a shift in funding mechanisms, Karnataka proposed moving from a “reimbursement-based” system to an “advance-release” model for centrally sponsored schemes. The state also requested an increase in Central support for Asha workers and Anganwadi helpers, raising their honorariums to Rs 5,000 and Rs 2,000 per month, respectively.
To address housing shortages, Karnataka suggested enhancing Pradhan Mantri Awas Yojana (PMAY) assistance from Rs 1.5 lakh to Rs 5 lakh for urban houses and from Rs 72,000 to Rs 3 lakh for rural houses. The state also called for additional railway lines, expedited infrastructure projects, and Central support for 50 per cent of land acquisition costs and 100 per cent of construction costs.
Other demands included approvals for road infrastructure projects, such as new ring roads and upgrades to National Highways, and increased pensions for the elderly, widows, and physically challenged individuals. Karnataka also emphasised the need for transparent and need-based reforms in disaster relief fund allocation, urging timely release of State Disaster Response Force (SDRF) funds.
KERALA’S DEMANDS
Kerala Finance Minister K N Balagopal expressed hope for a special package and measures to boost economic growth in the upcoming budget. The state has requested a Rs 24,000 crore package from the Centre, citing significant cuts in central allocations and declining tax revenues.
Balagopal noted that Kerala spends 63 per cent of its revenue on expenditure, higher than the national average of 53 per cent, making a special package crucial to address the shortfall.
Kerala has also sought a Rs 2,000 crore special package for the rehabilitation of landslide victims in Wayanad, a region declared a major disaster zone but yet to receive assistance. Additionally, the state emphasised the importance of the Vizhinjam International Seaport, requesting a Rs 5,000 crore package to support the project, which has the potential to significantly boost the Indian economy.
The state urged the Centre to provide Viability Gap Funding (VGF) as a special grant rather than a loan and requested exemptions for the borrowings of the Kerala Infrastructure Investment Fund Board (KIIFB) and Kerala State Social Security Pension Ltd (KSSPL) from the state’s borrowing limits. Kerala also called for an extension of the GST compensation period and allocations of Rs 300 crore for expatriate welfare schemes and Rs 1,000 crore to maintain the rubber support price at Rs 250 per kg.
Whether these requests will be accommodated remains to be seen when the budget is unveiled on February 1.