'FM Sitharaman declined special grant to Karnataka': Siddaramaiah to protest against Centre at Delhi's Jantar Mantar

Karnataka Chief Minister Siddaramaiah on Monday accused the Centre of withholding funds that are due to the southern state and said that he will be staging a protest at New Delhi's Jantar Mantar on February 7. He said the Centre had announced to provide Rs 5,300 crore for the Upper Bhadra scheme, an irrigation program, in the last year's budget but it had not released a single rupee so far.

"They have not released anything for drought relief either," he said in a detailed tweet. "This is not a political protest by the Congress Party against the BJP. We are protesting to highlight the unfair treatment by the Union Government, urging all Indians to take notice of this injustice," said Siddaramaiah, who returned to power in May last year.

Also read: 'If your budget can't sustain your spending, don't blame me': Sitharaman to Congress on funding for Karnataka

Siddaramaiah's announcement comes on the day when Leader of the Opposition in Lok Sabha Adhir Ranjan Chowdhury raised a similar question in the House and asked Sitharaman the reason behind the "indiscriminate and arbitrary attitude" of the Centre towards Karnataka. Sitharaman rejected the charge saying she, as the finance minister, does not have rights to change the allocation as per her whims and fancies and that payments are released as per the recommendations of the Finance Commission. 

The Karnataka chief minister further said that under the 14th Finance Commission (2015-2020), the state received 4.71 per cent of the tax share, which hesaid was reduced to 3.64 per cent by the 15th Finance Commission (2020-2025). "This 1.07 per cent decrease resulted in an estimated loss of Rs 62,098 crore for Karnataka over five years." 

To compensate for this loss, the chief minister said, the 15th Finance Commission recommended a special grant of Rs 5,495 crore for Karnataka in the interim budget. However, he claimed, Finance Minister Nirmala Sitharaman declined this grant. He also said that there were recommendations for Rs 3,000 crore each for lake and water body development and peripheral ring road projects. "Altogether, Karnataka missed out on a total of Rs 73,593 crore."

Siddaramaiah also accused the Union Finance Minister of not allocating enough funds for Karnataka in the Union Budget. He said Karnataka, the second-highest tax collector after Maharashtra, contributes a significant Rs 4,30,000 crore in tax revenue. However, he said, the state receives only around Rs 12-13 out of every Rs 100 in taxes, with the rest held by the Union Government.

To back his claim of not proportionate funding in the Union Budget, the chief minister states some numbers from the previous budgets. He said in 2017-18, with a Union Budget of Rs 21,46,735 crore, Karnataka received Rs 31,908 crore in tax devolution and grants totaling Rs 47,990 crore. In 2019-20, with a budget size of Rs 27,86,349 crore, Karnataka received Rs 54,814 crore, including Rs 39,806 crore in tax devolution and Rs 15,008 crore in grants.

However, in 2023-24, the Union Budget is Rs 45,03,097 crore, and Karnataka's share is only Rs 50,257 crore, comprising Rs 37,252 crore in tax share and Rs 13,005 crore in grants, he said, adding that the devolution rate has decreased from 2.2 per cent in 2017-18 to 1.2 per cent for 2024-25. "This consistent decline in the state's share highlights a growing injustice towards Karnataka."

"As the budget size doubled, it was expected that the state's tax share would also double. However, it has been reduced by more than half. Furthermore, cess and surcharge have been consistently increasing each year, with not a single rupee being returned to the states, even though both cess and surcharge are collected by the states themselves," Siddaramaiah said.

Earlier in the day, while responding to Adhir Chowdhury, Sitharaman had said: "There is just not a possibility that any finance minister can intervene to say - I don't like this state, stop the payment. No way. It cannot happen that way." She said the systems are well-placed and that the recommendations of the Finance Commission for every month's devolution will have to happen.

Sitharaman, however, asked the Congress that if everything was hunky dory six months ago, what happened now. She asked was the government spending on items it was not supposed to spend. "I'm not even questioning. Do spend it. But don't put the blame on me. Don't blame the Centre because it will go by rulebook 0 if it has to give, it will give."

The Union Finance Minister said that if the state expenditure was going into areas that could not be sustained by the budget, she was not responsible for it.