A report tabled in the Karnataka legislature during the Budget Session has reignited the debate on persistent regional imbalances in the State. Karnataka’s development story continues to be marked by sharp inter-district disparities, with divergence of key economic indicators widening over the years.

Characterised as a “State of contrasts”, Karnataka has recorded strong growth over the years (8.1% in 2025–26). However, this has not translated into economic convergence among districts. Growth remains concentrated in a few districts, while most continue to lag. Despite the State ranking second in Goods and Services Tax collection after Maharashtra and emerging as a hub of technology, innovation, and startups, its economic activity is largely confined to Bengaluru, and growth has occurred in the coastal districts of Dakshina Kannada and Udupi and the coffee-growing regions of the Western Ghats. 

The 2026 report on regional imbalances, tabled by a committee headed by noted economist M. Govinda Rao, paints a stark picture. Of the State’s 236 taluks, 177 have been classified as backward, including 59 as most backward, 59 as more backward, and 59 as backward. Only 59 taluks are categorised as developed. The share of backward taluks has risen from 65% (114 of 175 taluks) in 2001-02 to 72.8% in 2022-23. Of the 59 more backward taluks, 43 are in north Karnataka and only 16 are in south Karnataka, underlining the widening regional disparities despite overall economic progress.

Over the past two decades, the government has spent ₹35,380.24 crore on infrastructure development in backward taluks. However, there has been limited improvement in outcomes, which is attributed to “lack of prioritisation of projects and schemes with large social rates of return” and inefficiencies in the functioning of regional development boards — pointing to a serious administrative failure. It is argued that these boards have often served as places where senior legislators who could not be inducted into the Cabinet are accommodated in official capacities.

Within north Karnataka, Kalaburagi division accounts for the largest share (42%) of most backward taluks. This region, now known as Kalyana Karnataka (formerly Hyderabad-Karnataka), enjoys a special status under Article 371J of the Constitution since 2013.

Further, the committee’s analysis of the growth trajectories of different districts over the years indicates slow improvement of districts in north Karnataka and dramatic growth in Bengaluru and coastal districts. Inequality in per capita income remains stark. According to the State’s Economic Survey (2025-26), Bengaluru Urban leads with a per capita income of ₹8,55,960, followed by Dakshina Kannada (₹6,26,279), Udupi (₹6,00,683), Chikkamagaluru (₹4,94,787) and Shivamogga (₹3,89,743) — all above the State average of ₹3,86,156 in 2024-25. In contrast, Kalyana Karnataka and Kittur Karnataka in North Karnataka have recorded significantly lower figures at ₹189,938 and ₹226,213, respectively.

Karnataka’s industrialisation and service-sector expansion have remained overwhelmingly Bengaluru-centric. Bengaluru and its periphery, which contribute nearly 40% to the State’s Gross State Domestic Product, are home to many Fortune 500 companies and skilled manpower across sectors such as IT/BT (information technology/biotechnology), aerospace, and medical sciences, along with elite public institutions. While coastal districts are recognised as the ‘cradle of Indian banking’ and have grown through private entrepreneurship, the Mysuru region has grown through relatively better infrastructure, irrigation, education, and connectivity. But a district such as Chamarajanagar bordering Kerala and Tamil Nadu continues to show slower progress.

This widening gap reflects that a high percentage of the population in the north Karnataka region still depends on the agriculture sector, and ‘new economy’ sectors are yet to emerge here on a large scale. Historians and economists have pointed out that parts of northern Karnataka that had been carved out of the territories ruled by the Nizam of Hyderabad and those by the Bombay Presidency were steeped in feudal culture, which has not encouraged the ‘enterprising spirit’ of the people of the region. Unlike in the Wadiyars-ruled Mysuru, the Nizam-ruled regions did not see growth of industries or educational institutions. The recent protests by government job aspirants in Dharwad in north Karnataka underscore the lack of alternative employment opportunities, with limited transition from agriculture to industry and services. More than two decades ago, the D.M. Nanjundappa Committee (2002) found that north Karnataka was under-represented in public sector jobs (34.84%), while south Karnataka accounted for a dominant share (65.16%).

Increased spending alone may not suffice to spur growth. Multiple studies have argued that addressing regional disparities will require a bottom-up development approach, greater decentralisation, and stronger accountability. Sustained and balanced growth will depend on targeted investments in education, healthcare, and infrastructure, backed by responsive governance.