Karnataka Central Grant Dispute: State Plans Supreme Court Challenge
The Karnataka government has decided to approach the Supreme Court against the Centre over the reported withholding of ₹2,186.20 crore in 15th Finance Commission grants meant for gram panchayats during the 2025–26 financial year, Rural Development and Panchayat Raj Minister Eshwar Khandre said on September 11.
The decision was discussed at a meeting of departmental officials in Bengaluru. Khandre also held consultations with Advocate General Shashikiran Shetty and department secretary D. Randeep on the legal aspects of challenging the non-release of the funds, according to a report by Prajavani.
The minister said the amount was due to gram panchayats under the recommendations of the 15th Finance Commission. The state government is examining the legal grounds for questioning what it described as the withholding of Karnataka’s “fair share” of central grants.
Khandre linked the dispute to the state’s current water and agricultural conditions. He said Karnataka was facing a drought-like situation following deficient rainfall, with drinking-water problems reported in 710 villages. Of these, 149 villages were being supplied water through tankers, while the government had hired 561 private borewells, he said.
The minister also referred to crop-related distress, stating that seeds sown by farmers had failed to germinate in some areas. He said the government had discussed these conditions while considering the legal challenge over the grant allocation.
The 15th Finance Commission grants are intended for local governments, including gram panchayats. The state’s proposed action places the dispute within a wider question of how funds allocated to local bodies are released and used for essential services. The material available in the report does not include a response from the Union government, details of a Supreme Court filing or a hearing date.
Khandre also said the state was preparing to conduct elections to gram panchayats, taluk panchayats and zilla panchayats whose terms had ended. Preparatory work had been delayed because government staff had been assigned to the SIR exercise, he said.
The minister said Karnataka was fully prepared for gram panchayat elections and that a preliminary notification would be issued soon. The state government’s next step on the grant dispute is to finalise its legal course after consultations with the Advocate General and departmental officials.
