Bengaluru: The delay in conducting local body elections is set to cast a long shadow on the 2026-27 budget, with the state staring at significant losses in central grants. Karnataka is likely to forgo Rs 3,175 crore in the current financial year as elections to several rural and urban local bodies remain pending. The delay has stalled release of grants from the Centre, which hinge on duly constituted local institutions and periodic audits. The financial implications could deepen in the coming years. The 16th Finance Commission allocated Rs 29,897 crore to Karnataka for the five-year period beginning 2026. These grants are linked to the existence of elected local bodies. This works out to Rs 5,979.4 crore annually — funds the state can access only if elections are conducted and local institutions are formally in place. If polls are postponed by a year, the state stands to lose Rs 5,979.4 crore. A two-year delay would double the loss to Rs 11,958.8 crore, tightening pressure on a budget already grappling with limited revenues and rising expenditure. The scale is substantial. Elections are due for 31 zilla panchayats, 239 taluk panchayats and 5,950 gram panchayats across rural Karnataka. In urban areas, polls must be held to 187 city municipal councils and five major cities — Bengaluru, Mysuru, Mangaluru, Tumakuru and Shivamogga. In the absence of elected councils, grassroots governance too remains in limbo. C Narayanaswamy, chairman of the 5th State Finance Commission, Karnataka, said the state is certain to lose funds for 2025-26. “Since elections are pending for many local bodies and there is only less than a month left this financial year, it is certain the state would lose a substantial amount of funds,” he said. “Learning from this, elections must be held at the earliest in 2026-27,” he said. The commission’s report is scheduled to be tabled in the legislature on Friday alongside the budget. The issue puts the Siddaramaiah govt in a tight position since key sectors such as rural development, sanitation, drinking water and local infrastructure depend heavily on finance commission transfers. While the budget must accommodate welfare schemes, infrastructure spending and fiscal discipline, a preventable loss of central grants could shrink fiscal space further. Priyank Kharge, minister for rural development and panchayat raj, said the govt remains committed to holding elections. “Funds were released for panchayat bodies established through the electoral process. Pending polls for both rural and urban local bodies will be held without delay after completing due procedures,” he said. Revenue and expenditure figures will dominate attention when the budget is presented Friday. But the timing of local body elections may ultimately decide whether Karnataka secures nearly Rs 6,000 crore annually over the next five years — or lets it slip.
