Rejecting claims by the Karnataka government of discrimination in sharing central taxes, Union Finance Minister Nirmala Sitharaman said the allegations are “patently wrong and mischievous”.
The Minister, while addressing a conference in Parliament premises said, “There are factual errors, false monetary claims, misleading statements, and selective mention of certain losses allegedly suffered without mentioning the gains that have accrued to the state (Karnataka) in the 15th Finance Commission period.”
The Minister was replying to the Karnataka government’s claim of huge losses suffered by the state due to the 15th Finance Commission’s recommendation.
Currently, devolution of states’ shares is done as per recommendations of the 15th Finance Commission, said the Minister, adding, “The 15th Finance Commission submitted its final report in October 2020, and the government laid the Explanatory Memorandum as to the Action Taken on the Recommendations of the Commission in February 2021.”
“The award period of the Finance Commission is from 2020-21 to 2025-26,” she said.
As per the Minister, the share of each state in sharable central revenues fluctuates from Commission to Commission, and each Commission makes recommendations in its wisdom considering all the factors affecting various states and the Centre and with wide consultations with state governments.
During the 14th Finance Commission’s five-year award period (2015-16 to 2019-20), the Minister clarified, Karnataka received Rs 1,51,309 crore as tax devolution.
“However, in the first four years of the current 15th Financial Commission period, Karnataka would have already received Rs 1,29,854 crore by March 2024. The Government of India has projected a further release of Rs 44,485 crore in the Interim Budget for Financial Year 2024-25, taking the total to Rs 1,74,339 crore in five years. This is higher than the 14th Financial Commission period despite the precipitous drop in revenue during the COVID-19 period,” said the Finance Minister.
In short, the Minister said that despite the exceptional circumstances arising from the pandemic, which depressed central revenues, the Government of Karnataka will be getting substantially more as devolution during the first five years of the 15th Financial Commission period than in the 14th Financial Commission period.
To inflate its false claim of losses, Sitharaman said the Government of Karnataka has even included shortfalls for the next two financial years namely 2024-25 and 2025-26.
“Its (Karnataka government’s) figures of actual tax revenue percentage shared with states have been presented without any calculation details and appear to be imagined. Even according to these baseless figures asserted by the government of Karnataka, the actual tax devolution percentage has increased since 2015-16, contradicting the claim of mistreatment by the Centre,” added the Minister.
Sitharaman later told the Lok Sabha that the Centre has released all funds due to the Karnataka government as has been recommended by the Finance Commission from time to time.
“I want to assure the House that whatever has been recommended by the Finance Commission, I followed to the last word,” she said wondering “where is the Karnataka denied money”.