Chief Minister Siddaramaiah Slams Use of Karnataka’s Funds for ‘Corruption-Ridden’ States


Karnataka News


Chief Minister Siddaramaiah on Saturday accused the Central government of unfairly reducing Karnataka’s share in tax devolution, claiming that the state is being shortchanged. He expressed concern that Karnataka’s significant contributions to the national economy are being used to support states that are “misgoverned and corruption-ridden.” Siddaramaiah argued that since Prime Minister Narendra Modi’s government took office, Karnataka has faced financial setbacks, which he believes need to be addressed. He called for a public debate on how Karnataka can secure its rightful share of resources while maintaining respect for the federal structure of governance.

Karnataka Chief Minister Siddaramaiah

“The persistent injustice in tax distribution by the NDA government towards Karnataka is undeniable, with the latest tax share figures serving as clear evidence. Out of a total of Rs 1,78,193 crore allocated to 28 states, Karnataka has been given a meagre Rs 6,498 crore. This gross injustice calls for every Kannadiga, irrespective of caste, religion, or political affiliation, to pledge to raise their voice against such discrimination,” Siddaramaiah said.

“Let this Vijayadashami, a symbol of victory over injustice, mark the beginning of our collective fight for fairness, he said in a statement.”

Chief Minister Siddaramaiah questioned the unfair treatment of Karnataka, asking why the state is being neglected. He urged every proud Kannadiga to demand answers from the central government on why Karnataka’s hard-earned contributions are being used to benefit states with poor governance and corruption issues.

“Uttar Pradesh, infamous for its poor governance, has been allocated Rs 31,962 crore; Bihar, Rs 17,921 crore; Madhya Pradesh, Rs 13,987 crore; and Rajasthan, Rs 10,737 crore. Why should the sweat and toil of Karnataka fuel the growth of states that have lagged behind due to maladministration?” he questioned.

Despite Karnataka’s strong governance and development efforts, Chief Minister Siddaramaiah remarked that financial incentives are being funneled to states with weaker governance.

Chief Minister Siddaramaiah highlighted the financial disparity caused by changes in the tax devolution formula. He noted that the 14th Finance Commission allocated Karnataka 4.713% of the national tax pool, but the 15th Finance Commission reduced this share to 3.647%, resulting in a substantial financial loss for the state. This decrease will cost Karnataka an estimated ₹62,275 crore from 2021 to 2026, which Siddaramaiah described as an unjust blow to the state’s fiscal resources.

Siddaramaiah further emphasized the severity of the situation by noting that even though the Finance Commission recommended a special grant of ₹5,495 crore to offset the losses incurred by Karnataka, the central government has yet to release these funds. This refusal not only deepens the financial strain on the state but also exemplifies what he described as ongoing injustices faced by Karnataka. The Chief Minister’s statements underscore the growing frustration among state leaders regarding the perceived inequities in the distribution of national resources.

Siddaramaiah emphasized that Karnataka faced an enormous loss of ₹79,770 crore as a result of inequitable tax distribution throughout this period.

Despite representing just 5% of India’s total population, Karnataka plays a significant role in the country’s economy by contributing 8.4% to the national GDP. The Chief Minister noted that the state holds the second position in Goods and Services Tax (GST) collection and leads the nation with a remarkable growth rate of 17% in this area. “However, Karnataka receives only 52 per cent of the GST it collects, losing Rs 59,274 crore since the introduction of GST.”

“Even though Karnataka contributes Rs 4.5 lakh crore to the national exchequer annually, the state only receives Rs 45,000 crore in tax share and Rs 15,000 crore in grants and a mere 15 paise for every rupee contributed.

How long must we tolerate this gross injustice?” he asked.

Siddaramaiah highlighted that despite the union budget doubling from ₹24.42 lakh crore in 2018-19 to ₹48.20 lakh crore for 2024-25, Karnataka’s allocation has remained stagnant. The state received ₹46,288 crore in 2018-19, but the projected allocation for 2024-25 is only ₹44,485 crore, in addition to ₹15,299 crore in grants. This disparity raises concerns about Karnataka’s fair share of resources, given the significant growth in the overall budget.

He asserted that Karnataka deserves at least ₹1 lakh crore each year, but the state has been unjustly denied its fair share of funding.

The 15th Finance Commission proposed special grants totaling ₹5,495 crore, alongside an additional ₹6,000 crore for Bengaluru’s Peripheral Ring Road and water resource initiatives. However, these recommendations were dismissed by Finance Minister Nirmala Sitharaman, leading to a loss of ₹11,495 crore for Karnataka, he noted.

Siddaramaiah articulated that the foundation of India’s federal system is built on the collaborative efforts of both the central and state governments. He pointed out that the central government’s preferential treatment towards Karnataka and other southern states poses a significant threat to this vital equilibrium. Such a discriminatory approach not only disrupts the harmonious functioning of federalism but also jeopardizes the growth potential of these economically crucial states.

Achieving the ambitious goal of a $5 trillion economy hinges on the steadfast contributions from states like Karnataka; however, the central government continues to impose unfair treatment on these vital contributors. This inequity not only undermines the efforts of Karnataka but also hampers the overall economic growth of the nation. Such discrepancies in resource allocation reflect a broader challenge within the country’s economic framework, as states that significantly drive the economy are not given their due recognition and support.

The disbandment of the Planning Commission and its subsequent replacement with the NITI Aayog has effectively sidelined state governments, according to Siddaramaiah. He further noted that modifications to the goals of the 15th Finance Commission have disproportionately affected southern states, exacerbating their challenges in securing adequate funding and support. This shift in governance not only diminishes the role of state administrations but also threatens the equitable distribution of resources necessary for balanced regional development.

Karnataka’s tax revenues are being redirected to support states that have struggled to effectively manage their resources, which leaves Karnataka at a disadvantage during emergencies such as floods and droughts, according to the Chief Minister. This misallocation of funds hampers the state’s ability to respond adequately to crises and underscores the need for a more equitable distribution of financial resources from the central government.

“What use is taxation if Karnataka’s resources don’t serve the people of the state? If the hard-earned money of Kannadigas is not used to wipe their tears in times of crisis, what is the purpose of this federal structure? These are the questions we must confront,” he added.

Summary

Chief Minister Siddaramaiah has voiced his discontent with the Centre over what he considers an unfair allocation of funds to Karnataka. He emphasized that Karnataka, a state with substantial economic contributions, is receiving fewer funds while its tax revenues are directed toward aiding states plagued by mismanagement and corruption. Siddaramaiah called on the people of Karnataka to unite against this perceived injustice, encouraging public discourse to ensure the state secures its fair share of central funds. His strong stance has sparked discussions on financial equity and governance at both the state and national levels.

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