Funding gap widens: Karnataka bleeds money as Centre's share for welfare schemes lags

Bengaluru: Karnataka is spending Rs 1,917 crore annually to provide additional financial assistance, or a top-up, to frontline workers because the Union government has not hiked its contribution to their honorariums for years, a finance department report has said.

This is adding to the “strain” in the Centre-state ties, according to the Medium Term Fiscal Plan (MTFP) 2026-30 report.

The state and the Union governments jointly pay honorariums to Accredited Social Health Activists (ASHA), Anganwadi workers and mid-day meal cooks.

“Central contributions towards these honorariums have remained unchanged for extended periods despite rising living costs and expanded responsibilities,” the MTFP said. “The lack of periodic revision of unit costs has led to a growing incidence of state having to increase funding for centrally-sponsored schemes through a state top-up, particularly in respect of honorariums and incentives for frontline workers,” it said.

The state government pointed out that Anganwadi workers currently get Rs 12,000 per month. Of this, Rs 9,300 comes from the state and only Rs 2,700 from the Centre.

“ASHA workers receive Rs 8,000 per month, comprising Rs 2,000 under the National Health Mission and Rs 6,000 from the state. Similarly, cooks and helpers under the mid-day meal scheme receive Rs 600 per month from the Centre, while the state contributes Rs 4,100,” the MTFP said.

Karnataka, which is already confronting the Union government over the scrapping of MGNREGA, also complained about “the limited extent of Central cost-sharing in key pension schemes”. While the Centre supports 14.14 lakh beneficiaries in Karnataka under the National Social Assistance Programme (NSAP), the state government covers an additional 80.31 lakh beneficiaries under its own schemes.

“As a result, Central assistance reaches barely 15% of total beneficiaries in the state,” the MTFP said. In the current fiscal, Karnataka has spent an estimated Rs 10,668 crore on social security pensions of which the Centre’s share is just Rs 639 crore. 

Karnataka has also flagged similar funding gaps in housing and food grain procurement. 

“Delays and shortfalls in the release of Central funds under centrally-sponsored schemes have imposed significant cash-flow pressures on the state,” the MTFP said. “These structural pressures have reduced flexibility in resource allocation, constrained discretionary and developmental spending, and limited the pace of capital formation.”

Under the Jal Jeevan Mission, for example, Karnataka has had to pay even the Centre’s share to keep the programme going. So far, the state has released Rs 24,598 crore against the Centre’s Rs 11,787 crore.