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Journalism of Courage
For the first time since the turn of the century, the entire Karnataka government under Chief Minister Siddaramaiah is protesting in Delhi against the Union government on Wednesday (February 7).
Karnataka is the first of the three opposition-ruled state governments from South India — Kerala and Tamil Nadu being the other two — to take its grievances to the national capital.
The 15th Finance Commission (FC) recommendations had angered Karnataka and other Southern states. The 15th FC shrank Karnataka’s share in the divisible pool of taxes shared by the Centre from 4.71 per cent to 3.64 per cent, which was around 22.5 per cent less than it received under the 14th FC. In terms of percentage points, Karnataka was the biggest loser of this sharing formula.
With the then BJP government under B S Yediyurappa contesting the recommendations, the 15th FC in its final report recommended a one-time grant Rs 5,495 cr for the 2020-21 fiscal, Rs 3,000 for the development of Peripheral Ring Road around Bengaluru and Rs 3,000 cr for the development of water bodies around Bengaluru, to compensate Karnataka.
However, the Centre rejected both these recommendations meant to aid the state.
Karnataka estimates the losses suffered by the state at 1.87 lakh cr.
As its share in GST devolution reduced almost by a quarter, Karnataka has projected the losses due to this at Rs 62,098 cr between the years 2020-21 to 2025-26.
Second is the losses suffered due to inadequate GST compensation, which was also discontinued in June 2022. According to the state government, even during the years when it was active, Karnataka was not adequately compensated for the losses. For instance in 2017-18, when it was eligible for a compensation of Rs 11,044 cr, GST compensation received from the Centre was a paltry Rs 6,246 cr. Similar shortfalls were recorded till this was discontinued.
The third category, according to Siddaramaiah, is ‘looted using cesses and surcharges’ – Rs 55,000 cr between 2017-18 and 2023-24. “Centre refuses [to share] the cesses and surcharges with the states,” the CM said, adding that he would pile pressure on the 16th FC to this effect.
The fourth is also related to the 15th FC recommendations. None of the funds, totalling Rs 11,495 cr, was released to the state. While the Centre rejected the Rs 5,495 cr special grant recommendations, it asked to take up the Peripheral Ring Road project and development of water bodies — for which Rs 6,000 cr was recommended — with its own resources.
Another prominent issue being highlighted by the Karnataka government is that though the Union budget size almost doubled from Rs 2.44 lakh cr in 2018-19 to Rs 45.03 lakh cr in 2023-24, there hasn’t been any commensurate increase in resources allocated to Karnataka.
Karnataka received Rs 46,288 cr in 2018-19 under devolution of taxes and grants for Centrally Sponsored Schemes and Rs 50,257 cr in 2023-24.
Apart from it, according to Union Budget documents, the actual share of taxes devolved to the states was only around 30 per cent — as against 41 per cent recommended by 15th FC. Karnataka is unhappy about this dip in share by almost a third.
Union Finance Minister Nirmala Sitharaman, speaking at the Parliament Monday, had refuted claims that the Centre was withholding funds to non-BJP ruled states.
Devolution of taxes was based on the recommendations of the Finance Commission, and she had no discretionary powers. “This apprehension that some states are being discriminated against is a politically-vitiated narrative,” she said.
In Karnataka, BJP has taken a dig at the government for resorting to political antics after exhausting the state exchequer by funding guarantee schemes.
