In Bengaluru, the new civic arrangement does not unlock new revenue opportunities

The problem that arose when the erstwhile Bruhat Bengaluru Mahanagara Palike (BBMP) was divided into five corporations was the disparity in their revenue capacities that needed to be addressed. However, the new setup will enter the next year with almost unchanged revenue capacities.

The Brand Bengaluru committee has estimated that corporations in the north and west will have the lowest collection of property tax – ₹543 crore and ₹580 crore respectively – which is the primary source of revenue for corporations. Bengaluru Development Minister DK Shivakumar then said that the corporation will receive financial assistance from the government.

“It will also be an opportunity for the appointed corporation commissioners to explore newer avenues for the future civic body,” Mr. Shivakumar said. However, corporations have largely failed to create new revenue streams, although they have boosted property tax collections.

The new corporations had high hopes for three main sources: advertising revenue, premium FARs, and conversion of B-Khat to A-Khat. While the B-Khata to A-Khata conversion scheme received a very poor response, premium FARs and advertising revenue increased, according to the Corporation Commissioners. However, revenues from both directions are earmarked for large B-SMILE projects, not for corporations.

Failed to create paths

The five corporations’ very first budgets were expected to reflect efforts to explore new sources of revenue, but all largely followed a template.

The companies have spent more than ₹3,500 crore each with the hope of generating revenue from the conversion of B-Khat to A-Khat and the paid parking system. The paid parking system has seen success in the Central Corporation, which has implemented it on 10 roads and even at KR Market. However, the rest tried to attract even a single person interested in its implementation.

Now the urban development department has come in with new GBA parking rules, which essentially aimed to generate revenue through strict parking permits, but these have attracted public criticism. Even towing operations were seen as a potential source of revenue, but according to GBA sources, these operations are currently witnessing negative cash flow.

B-Khat to A-Khat

With great anticipation, the Government of Karnataka has announced the B-Khata to A-Khata conversion scheme. The government estimated that six million properties would fall under the scheme and hoped for significant revenue. He set a conversion fee of 5% of the area’s guide value, which meant that the conversion fees ran into millions of rupees. Furthermore, the redevelopment involved only the land, not the buildings built on the land.

Although months have passed since the announcement, only a modest 12,000 applications have been received, prompting the government to offer a 60% discount and reduce conversion fees to 2% of the benchmark. Despite the discount, only 80,400 applications were received by the end of August, which is only 13.4% of the total properties.

Apart from what came as a setback, FAR premiums and advertising revenue were transferred to B-SMILE. Both the routes were quite good sources of income, with the ability to generate more than ₹200 crore.

For example, North Corporation collected ₹185 crore from the premium FAR, but the entire amount was transferred to the SPV.

Strengthening property tax collection

As corporations attempted to expand their property tax potential, they could only bring about 18,000 properties into the tax bracket. For the financial year 2026-27, the five companies have a combined wealth tax revenue target of over ₹6,700 crore. They have collected ₹3,372.48 crore till 22 August.

The development is attributed to measures such as the inclusion of several properties in the municipal tax zone, the identification and collection of tax defaulters and the monitoring of arrears. While this was a positive result, corporations believe it will improve further as the workforce increases.

On Wednesday, GBA Chief Commissioner M. Maheshwar Rao said several surveys, including the SIR, Socio-Economic Survey and Census, have influenced efforts to strengthen revenue collection.

At the end of the year, according to the commissioners, the new corporations were doing quite well financially, although the West Corporation’s problems persisted. Besides, the corporations are yet to get the financial assistance from the government recommended by the 15th State Finance Commission, which is more than ₹800 crore.

However, until the end of December 2025, the government released funds for the maintenance of corporations three times. The Corporation Commissioner told The Hindu that the civic bodies will first carry out the civic works and then send the bills to the government for reimbursement. “Even the budget expenditure is derived on the condition that government funds will be required later,” he said.

(This is the fifth in a series of reports assessing the governance restructuring of Bengaluru with GBA and five companies, one year after the reform.)

Published – 03 Sep 2026 20:44 IST