Karnataka government officials have decided to approach the Supreme Court over the alleged withholding of ₹2,186.20 crore in 15th Finance Commission grants meant for gram panchayats during 2025–26, Rural Development and Panchayat Raj Minister Eshwar Khandre said on Friday.
Bengaluru | September 11, 2026
Khandre announced the decision after a departmental meeting on central grants, where he discussed the proposed legal action with Advocate General Shashikiran Shetty and department secretary D. Randeep. The minister said the state would challenge what it described as the non-release of funds recommended for rural local bodies.
The grants are linked to the 15th Finance Commission’s recommendations for gram panchayats. The state government’s decision comes as Karnataka reports drinking-water stress in parts of rural areas because of deficient rainfall, according to the minister’s statement.
Khandre said 710 villages were facing drinking-water problems and that water was being supplied by tankers to 149 villages. The department has also hired 561 private borewells to address local water needs, he said. The minister further referred to farmers facing difficulties after sown seeds failed to germinate, citing the prevailing drought-like conditions in the state.
The minister said discussions with the Advocate General and senior officials focused on the legal grounds for questioning what he called the failure to release Karnataka’s fair share of central funds. The report did not specify when the petition would be filed or identify the central government department responsible for the alleged withholding.
Finance Commission grants are intended to support the functioning and delivery of services by local governments. For gram panchayats, such funding can cover civic responsibilities and local public works, but the report did not provide a project-wise breakdown of the ₹2,186.20 crore or details of any release already made during the financial year.
Khandre also said the state government 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 were deployed for SIR-related duties, he said.
The minister said Karnataka was fully prepared for the gram panchayat elections and that a preliminary notification would be issued soon. The government’s next steps on the grant dispute will depend on the legal consultations and the filing of the proposed petition before the Supreme Court.
