Union Finance Minister Nirmala Sitharaman on Wednesday sought to dismiss allegations that the Centre was not giving money to the States and termed the Karnataka government’s charges about inadequate tax devolutions and discrimination in sharing Central taxes “patently wrong and mischievous”.
Speaking in response to the discussion on the Interim Budget in the Lok Sabha, Ms. Sitharaman referred to the big debate stirred by Karnataka government representatives in the capital, which is also being supported by the Kerala government. Noting that even Tamil Nadu had voiced concerns, the Minister assured the House that the government had followed the Fifteenth Finance Commission’s recommendations on tax sharing with States to “the last word”.
The Centre has, in fact, done more than what the Finance Commission asked it to do, including releasing an amount of ₹81,470 crore to States that had been lying unutilised since 1996, she asserted. Karnataka received ₹2,671 crore of that amount as well as ₹6,280 crore as a 50-year interest-free loan under the scheme to support capital expenditure by States.
Briefing media on Karnataka’s charges earlier in Parliament, Ms. Sitharaman had pointed out that the State also received ₹6,196 crore of Central funding towards disaster relief so far during the award period governed by the 15th Finance Commission, which began in 2020-21 and concludes in 2025-26.
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‘Will be getting more’
“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 FC period than in the 14th FC period,” the Minister said.
To “inflate its false claim of losses”, the State government has “even included shortfalls for the next two financial years” and its figures of actual tax revenue percentage shared with States have been presented without any calculation details and “appear to be imagined”, Ms. Sitharaman said.
“Even according to these baseless figures asserted by the Karnataka government, the actual tax devolution percentage has increased since 2015-16, contradicting the claim of mistreatment by the Centre,” she emphasised.
