Raghuram Rajan-chaired committee in 2013 suggested funds for Karnataka should be reduced, claims BJP

As Congress steps up attack on the Centre over fund disbursal to Karnataka, the Bharatiya Janata Party (BJP) on Thursday claimed that a committee chaired by Raghuram Rajan had in 2013 suggested that the southern state's share should be reduced from 4.13 per cent to 3.73 per cent, "which is what the Finance Commission did".  

"All this happened under the Congress-led UPA! The Congress Govt of Karnataka is now essentially protesting their own Govt's decision. This is nothing but sinister, divisive politics," said BJP's IT cell head Amit Malviya. 

He said on 2nd September 2013, the report of the Committee for Evolving a Composite Development Index of States, chaired by Raghuram Rajan, suggested that Karnataka's share should be reduced from 4.13 per cent to 3.73 per cent. He said this was later done by the 15th Finance Commission. 

Also read: 'Can't fulfil poll freebies, shifting blame': Sitharaman fires back at Siddaramaiah, says gave additional funds to Karnataka

Karnataka Chief Minister Siddarmaiah earlier this week targeted Finance Minister Nirmala Sitharaman for allegedly withholding funds that were due to the southern state. He said Sitharaman declined a special grant that was recommended by the Finance Commission. However, the finance minister rejected the claim, saying that the grant recommendation was not part of the final report. 

Siddaramaiah also said under the 14th Finance Commission (2015-2020), Karnataka received 4.71 per cent of the tax share, which was reduced to 3.64 per cent by the 15th Finance Commission (2020-2025). 

"This 1.07% decrease resulted in an estimated loss of Rs 62,098 crore for Karnataka over five years. To compensate, the 15th Finance Commission recommended a special grant of Rs 5,495 crore for Karnataka in the interim budget, which Finance Minister Nirmala Sitharaman subsequently declined," the chief minister said

However, Malviya, while sharing a few pages of the report, stated that what the Finance Commission did was once recommended by Raghuram Rajan, who later became the RBI Governor. The BJP leader also said that, as per reports, Rahul Gandhi wants to nominate Raghuram Rajan to the Rajya Sabha. "Before he does that, will the Congress explain why would they want to honour someone who has undermined the interest of Karnataka?" he asked. 

Finance Minister Sitharaman on Wednesday rejected all charges of bias against Karnataka. She said the Karnataka government has received a revenue deficit of rs 1,631 crore recommended by the Finance Commission. Similarly, it said, Kerala, another southern state has received revenue deficit grants based on the recommendations of the 15th FC. 

"However, other states such as Uttar Pradesh, Madhya Pradesh Gujarat, and Bihar did not receive any revenue deficit grant whatsoever - hardly a discrimination against any region or party in power," she said, adding that the selective reference on devolution and ignoring grants is 'mischievous and unfair to the non-partisan expert Constitutional body, Finance Commission.'  

The ministry said that apart from the devolution, the Government of India in March 2022 settled an additional amount of Rs 2,671 crore due to Karnataka, which had been outstanding from as far back as 1996.