Devolution: Rs 26,140 crore shortfall for Karnataka, says Siddaramaiah

Karnataka has incurred a shortfall in tax devolution to the tune of Rs 26,140 crore over the last three years, Chief Minister Siddaramaiah said in his Budget on Friday, launching a broadside against the Union Government.

The state has lost Rs 10,858 crore in 2023-24 alone, Siddaramaiah said.

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"Even though Karnataka is one of the main contributors to the Centre’s revenue collection, only 3.65 per cent of the divisible pool is devolved to the state by the central government. When compared to other states, our state has incurred huge losses due to the recommendations of the 15th Finance Commission, which meted out gross injustice to our state," Siddaramaiah said.

The 14th Finance Commission had given Karnataka a share of 4.71 per cent in taxes. Siddaramaiah's shortfall figures are notional, assuming that the state continued to get 4.71 per cent.

Siddaramaiah slammed the previous BJP government for being a "silent spectator" when the 15th Finance Commission submitted its "anti-state" report.

Karnataka is being shortchanged because the union government does not share cess and surcharges under devolution, Siddaramaiah said.

"The increase in cess and surcharges imposed on taxes has decreased the tax devolution share to the state. In 2022-23, the central government has collected Rs 5,20,570 crore from all the states by levying cess and surcharges and the loss in devolution to the state is Rs 7,780 crore," Siddaramaiah said, adding that his government "strongly opposes" this move.

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Siddaramaiah also complained that the Union Government is "gradually" decreasing grant-in-aid for Centrally-Sponsored Schemes (CSS).

On GST, Siddaramaiah said that the states were assured by the union government of an annual growth rate of 14 per cent. "But the trend in GST collections in the state in the past 5 years shows that the promise of the central government has not been fulfilled. Further, the GST compensation provided to the states has been discontinued since July 2022. Due to these factors, there is a shortfall of nearly Rs 26,954 crore in GST collections for FY 2023-24, which has caused a severe impact on the fiscal position of the state," Siddaramaiah explained.

Siddaramaiah, in his Budget speech, vowed to make Karnataka's economy better. "Although the economy of the state was plunged into darkness by the previous government, I will not hesitate to take firm steps to revive the economy," he said.

In the current fiscal, Karnataka has to get Rs 37,252 crore under devolution and a grant-in-aid of Rs 13,005 crore from the union government.