Centre not discriminating in release of funds to Karnataka: Nirmala Sitharaman

New Delhi: Union Finance Minister Nirmala Sitharaman on Monday dismissed apprehensions that the Centre was discriminating against Karnataka and other non-BJP-ruled states in release of funds, as she weighed in on the issue that has become a political hot potato.

Terming the narrative “politically-vitiated”, Nirmala the system of tax devolution is well placed and, thus, can’t be changed as per anybody’s whims and fancies. A combative Nirmala instead pointed fingers at the Karnataka government's poll guarantees for the fiscal stress.

Replying to a question by Congress leader Adhir Ranjan Chowdhury in the Lok Sabha, who brought up the Karnataka government's claim that it has been deprived from its legitimate dues, Nirmala said, “This is just not a possibility that any finance minister can intervene to say that 'I don't like this state, stop payment'. No way. It can't happen that way. The systems are well placed." 

She underlined that while devolution of funds collected under direct taxes are done as per the recommendations of the Finance Commission, the entire money collected as State Goods and Services Tax (SGST) go to states.

As per the recommendations of the 15th Finance Commission, 41% of the money from the divisible pool of taxes have to be given to states.  

On devolution of the GST fund, Nirmala noted that the distribution of funds collected under the Integrated Goods and Services Tax (IGST) is being periodically reviewed by the GST Council.  

“I don’t have the right to change the rules as per my whims and fancies...I have no role to play,” she said. “This apprehension that some states are being discriminated against is a politically vitiated narrative which, I am sorry to say, vested interests are happy to go about saying.” 

Karnataka and other non-BJP ruled states like Tamil Nadu, Kerala, Punjab and West Bengal have been accusing the Narendra Modi government of discrimination in fund allocation.

Alluding that fund crunch in Karnataka is due to increased spending on guarantee schemes, Nirmala said, “Have you started spending on items which you were not supposed to spend? I am not even questioning that. Do spend. But don’t put the blame on me. Don’t put the blame on the Centre.”

“If the expenditure is going into areas which cannot be sustained by your budget, I am not answerable for that,” she said, referring to the financial strain faced by the Karnataka government.  

CM Chief Minister Siddaramaiah on Monday said Karnataka has lost Rs 1.87 lakh crore under the 15th Finance Commission and that Congress’ protest in New Delhi this week is to fight this “big injustice” to the state. All Congress lawmakers from Karnataka led by Siddaramaiah will protest at Jantar Mantar on February 7.