Stepping up the attack on the NDA government over the issue of tax devolution, Karnataka Chief Minister Siddaramaiah on Monday said the state has incurred a total loss of ₹1.87 lakh crore during five years under the 15th finance commission due to declining Central grants and urged that they be set right.
Also, clarifying he or his government was not against the Centre giving more funds to northern states that are “poor” or lacking development, he said all that they want is injustice should not be done to states like Karnataka.
The government was mulling over tabling a “white paper”on the state’s finances, during the upcoming Budget session of the legislature, he told a press conference here.
“Karnataka did not get or incurred a loss of ₹1,87,000 crore under the five years of the 15th Finance Commission, everything included, devolution and other things. We are protesting that this be set right,” he said, as he mentioned about the Centre allegedly delaying various irrigation and other developmental projects in the state. Referring to the February 7 protest announced by the the Congress government in Karnataka and the party in New Delhi, he said it was to attract the attention of the central government and the people of the country. “So far we had never staged a protest in Delhi, but due to unavoidable reasons, a situation has come for us to stage the protest,” the CM said. Siddaramaiah, who has presented a record 14 budgets in Karnataka Assembly and is all set to do it for the 15th time later this month, was flanked by Deputy chief minister D K Shivakumar, senior Ministers, legislators and officials during his media interaction.
The CM detailed the alleged losses Karnataka has suffered over the years due to decline in tax devolution and grants-in aid from the Centre. Pointing out at the federal structure of the country and that the taxes collected from the states go to the Centre, he said in the 14th Finance Commission, tax devolution to states from the central divisible pool was 42 per cent, and in the 15th Finance Commission, which was formed in 2015-16 after Narendra Modi became Prime Minister, reduced to 41 per cent. Karnataka’s share in tax devolution fell from 4.71 percent of total taxes under the 14th Finance Commission to 3.64 per cent in the subsequent one, which is a decrease of 1.07 per cent, he said. “In the last four years since the 15th Finance Commission came, the loss from the tax devolution alone is about ₹45,000 crore”. Total loss in five years on account of recommendations of the 15th Finance Commission is to the tune of ₹62,098 crore, by including the estimates for this year too, he added. Noting that the Finance Commission, on realising the loss being incurred by Karnataka, had recommended for a special grant of ₹5,495 crore for the state in the interim report, and additional ₹6,000 crore in the final report for the development of water bodies and peripheral ring road, the CM claimed Union Finance Minister Nirmala Sitharaman, who is Rajya Sabha member from the state, rejected this recommendation.
Incidentally Karnataka’s claim that the Centre is not releasing funds due to it was raised in the Lok Sabha earlier today by Congress’ Adhir Ranjan Chaudhury.
Responding, Sitharaman said such a situation cannot happen as the “system is well placed” and the central government works according to recommendations of the Finance Commission. The total loss to the state from tax devolution under 15th Finance Commission and rejection of special grants is about ₹73,593 crore, Siddaramaiah added. Further, he said the state is still facing losses from the GST, with the compensation from the centre being stopped.
₹4.30 lakh crore tax gets collected from Karnataka, and the state is second in the country after Maharashtra in tax collection. It received a total of ₹50,257 crore this year from tax share and as grants for centrally sponsored scheme. “Which means, to say, out of ₹100 sent to centre from Karnataka, the state gets back only ₹12-13; the rest remains with the centre.”
He hit out at the BJP for claiming the Centre has given more to the state, than in the past, under the NDA rule. While giving the figures or doing comparison on tax devolution and money sent to the state from the centre in terms of grants, the constant increase in the budget size is not taken into account by them, he averred. “Devolution and grants was 2.2 per cent in 2017-18, it has reduced to 1.23 per cent in 2024-25, while the budget size has doubled…they (BJP) are lying and misleading the people,” he alleged. The CM said his government will strongly demand with the 16th Finance Commission to give to the States the share of cess and surcharge collected. Stating that he is not against giving grants or funds to northern states and is in favour of giving more to the states that are “poor” and lacking development, the CM said, “what I’m saying is don’t do injustice to states like Karnataka…also, do justice to the losses we have suffered.”
Further noting that the state government has submitted a memorandum to the Government of India regarding the severe drought situation in the state, Siddaramaiah said, the crop loss is to the ture of ₹35,000 crore, and Karnataka has requested the Centre to release ₹17,901 crore from National Disaster Response Fund (NDRF). It has not received any relief so far.
He charged the opposition BJP with making false allegations against his government that it has not paid any relief towards crop compensation. The state government has released ₹2,000 as first installment to each of the affected farmers benefiting 34 lakh of them.
Highlighting that in the last Union budget, Sitharaman had said ₹5,300 crore will be given to the state’s Upper Bhadra irrigation project, Siddaramaiah said, “not even a single rupee had been released for the same so far by the centre.”