Bengaluru civic bodies gamble on new revenues to bridge spending surge

Bengaluru’s five newly formed municipal corporations have projected over Rs 4,400 crore in fresh revenue for the upcoming financial year, relying on a mix of schemes such as Floor Area Ratio (FAR) relaxations, single-plot approvals, and khata regularisation.

This indicates that authorities, in their bid to widen revenue sources, are banking heavily on mechanisms that are either untested or have shown weak traction so far.

The combined outlay of all five corporations for 2026–27 is pegged at Rs 20,217 crore, marking about a 1% increase over the current year.

According to budget documents, the five corporations together expect to raise Rs 2,110 crore from premium FAR — a scheme that allows developers to purchase up to 40% additional FAR by paying 28% of the guidance value as a fee. While the target appears ambitious, town planning officials are confident of achieving it, citing an uptick in Bengaluru’s real estate market.

In the three months since the premium FAR policy came into force, the Bengaluru Central City Corporation has raised Rs 30 crore, while the West Corporation has generated Rs 39.73 crore. Other corporations are yet to see traction, even as the East Corporation expects to generate the highest revenue under this policy.

Officials are also banking on a new scheme that allows conversion of ‘B’ khata to ‘A’ khata, provided property owners pay 5% of the guidance value as regularisation charges. All five corporations together expect to generate over Rs 1,700 crore from this, with the North (Rs 680 crore) and West (Rs 563 crore) corporations projecting the largest shares.

However, data from 2025–26 paints a more modest, though promising, picture.

So far, the five corporations have received 9,452 applications. Of these, about 2,489 have been approved, but only around 350 property owners have made payments, totalling roughly Rs 17 crore. Officials believe the scheme will gain traction in the coming months, noting that Bengaluru has over 7.5 lakh 'B' khata properties.

Single-plot approval is the third new policy, enabling city corporations to approve plots of up to 10,000 sqm that have been converted for non-agricultural use, but are not part of layouts formed or approved by the Bangalore Development Authority (BDA). This approval allows property owners to obtain ‘A’ khata by paying 5% of the guidance value.

All five corporations have projected revenue of Rs 614 crore from this scheme in 2026–27, even though none has generated any revenue from it in the current financial year. Officials said procedural delays, lack of clarity, and low initial uptake have stalled collections, but they are hopeful of a turnaround.

The aggressive revenue projections, however, carry significant risks.

A government source warned that corporations could face difficulties meeting operational expenses, if collections fall short.

"The two-year delay in clearing contractors’ bills has not reduced even by a month, despite senior bureaucrats presenting budgets over the last five years. Overestimating revenue could lead to more stalled projects, mounting liabilities, and further delays in payments,” the source said, adding that corporations should ideally have dropped several non-essential works to make the budget more realistic.