‘Freebies have destroyed finances...’: Mohandas Pai slams Karnataka’s fiscal priorities, says stop blaming Centre

Former Infosys CFO and Aarin Capital chairman TV Mohandas Pai weighed in on the renewed debate over Karnataka’s share in central tax devolution, urging state ministers to stop raising what he called an “old matter” and instead concentrate on improving Bengaluru’s finances and infrastructure.

Responding to state ministers’ criticism of the Centre, Pai wrote on X (formerly Twitter), “This is decided by the Finance Commission, not any government whether UPA or NDA. Old matter there is no use raising it like this. Already Karnataka and @lkatheeq have raised this before 16 FC. Yes, Karnataka has got less than it deserves. Reduction started with 14FC led by UPA! True.”

Pai pointed out that Karnataka’s lower allocation in the tax devolution pool was a long-standing issue linked to the Finance Commission’s formula and not to the current central government’s decisions.

‘Freebies have destroyed our finances’

Shifting focus to the state’s internal fiscal management, Pai said the real concern was the government’s handling of Bengaluru’s finances and civic issues.

“The bigger question is how much is govt giving for Bengaluru? 60000 of freebies has destroyed our finances and we are in deep trouble. Look at Bengaluru, govt is not even able to give us pothole-free roads after 2.5 years! Please focus on this,” he said.

He noted that despite Bengaluru being the state’s economic powerhouse, the city continues to struggle with poor roads and collapsing infrastructure.

Praise for investment efforts

Pai, however, also struck a positive note, commending Industries Minister MB Patil for his ongoing investment promotion efforts.

“Minister you are doing a great job marketing Karnataka and getting investment in. Congrats. We need more,” Pai wrote.

Pai’s remarks came after Karnataka Ministers M.B. Patil and Priyank Kharge criticised the Centre for what they called “financial discrimination” against the state in the latest round of tax devolution announced in October 2025.

Patil argued that since Karnataka contributes significantly to national revenues, it deserves a larger share in return, demanding “financial fairness” and “justice for Karnataka.”

Tax share data: Karnataka gets ₹3,705 crore

According to Finance Ministry data, Uttar Pradesh received the highest share at ₹18,227 crore, followed by Bihar (₹10,219 crore), Madhya Pradesh (₹7,976 crore), and Karnataka (₹3,705 crore). Goa received the smallest share at ₹392 crore.

Karnataka has long argued that the Finance Commission’s devolution formula—giving greater weightage to population and income distance—penalises industrialised and high-growth states such as Karnataka and Tamil Nadu. Economists have repeatedly noted that this structure tends to favour more populous and lower-income states, deepening the north-south fiscal divide.