Karnataka Chief Minister D.K. Shivakumar on Wednesday, 2 September pressed NITI Aayog to ensure the state receives its rightful share of Central funds — including allocations announced in previous Union Budgets — during a meeting with NITI Aayog Vice-Chairman Ashok Kumar Lahiri at his official residence, Krishna, in Bengaluru. The appeal underscores a long-running friction between southern states and the Centre over fiscal devolution.

Key Demands Placed Before NITI Aayog

Shivakumar stressed the principle of cooperative federalism, arguing that national growth is impossible without the parallel development of states. He called on NITI Aayog to extend 'all possible support' to Karnataka and said the state had waited a long time for a dedicated bilateral meeting with the body.

The Chief Minister also raised Karnataka's case for special consideration in dryland agriculture, noting that the state has the second-largest extent of dryland after Rajasthan. He urged the planning body to factor in this agricultural reality when determining support and resource allocation.

The Population-Formula Flashpoint

One of the sharpest points raised by Shivakumar concerned the formula used to distribute Central funds. He argued that southern states, which successfully implemented population-control measures decades ago, are now being penalised through population-based allocation norms that reward states with higher headcounts.

'The Southern states have effectively implemented population-control measures, whereas the Northern states have not done so adequately. The Southern states should not be penalised by determining the share of funds primarily on the basis of population,' Shivakumar said, adding that he had raised the same concern directly with Union Home Minister Amit Shah in a recent discussion.

This concern is not new — it has been a recurring grievance across southern states, particularly during Finance Commission deliberations, and Karnataka's articulation of it at a NITI Aayog forum adds institutional weight to the argument.

Karnataka's Economic Standing

Officials at the meeting presented data showing Karnataka's Gross State Domestic Product (GSDP) stood at ₹32.81 lakh crore in 2025-26, registering a growth rate of 8.1 per cent. The services sector accounted for 70 per cent of the GSDP, followed by industry at 19 per cent and agriculture at 11 per cent.

Shivakumar highlighted Karnataka's leadership across multiple indicators — GSDP, per capita income, human development, technology, foreign direct investment, exports, startups, and IT services. He noted that the state produces around 1.6 lakh engineers and nearly 13,000 doctors every year, while Bengaluru alone is home to approximately 2.6 million IT professionals.

'Karnataka has the highest quality human resources in the country,' he said, recalling former Prime Minister Atal Bihari Vajpayee's observation that world leaders visiting India would prefer to visit Bengaluru before Delhi — a remark Shivakumar said he had recently shared with Prime Minister Narendra Modi.

The 'Second Bengaluru' Proposal

NITI Aayog Vice-Chairman Lahiri endorsed the idea of developing a 'second Bengaluru' within Karnataka to relieve pressure on the existing city, whose population is continuously rising as people from across the country migrate there for employment. Shivakumar said the state government would study similar initiatives in other states before formulating a concrete plan.

'All these factors are putting pressure on Bengaluru. We have formulated several ambitious projects to improve the city's infrastructure, and they are at various stages of implementation,' Shivakumar said.

Lahiri expressed confidence in the state's growth potential, saying, 'Karnataka has all the potential to grow rapidly. The country can grow and develop only when the states grow.' He also stressed the need to formulate plans to boost productivity in dryland areas.

Welfare Spending and What the State Is Asking For

The Chief Minister also drew attention to the fiscal burden of the state government's five guarantee schemes, on which it reportedly spends more than ₹50,000 crore every year. Additionally, the state spends around ₹20,000 crore annually on electricity subsidies to provide free power to farmers.

Shivakumar said plans to develop government schools and improve rural education were also in progress, and called on NITI Aayog to back these initiatives. Senior officials present included Minister Priyank Kharge, Chief Secretary Shalini Rajneesh, Economic Adviser L.K. Atheeq, Political Secretary A.S. Ponnanna, Development Commissioner Uma Mahadevan, and Additional Chief Secretary Tushar Girinath.

With Karnataka's next budget cycle approaching and Finance Commission recommendations still a live debate, how NITI Aayog responds to these demands could shape the state's fiscal planning for the years ahead.