The protest staged by Chief Minister Siddaramaiah, members of his cabinet, Congress MLAs and party officials in Delhi against the central government’s policy of discrimination against the state in financial allocations was unprecedented.
The Karnataka government has made the complaint for many months and the ‘Chalo Delhi’ protest has taken the matter to the national stage.
Siddaramaiah has been asking for a fair and equitable distribution of funds which has turned skewed against Karnataka as well as the other southern states in the past many years.
The Chief Minister has said that the state received only Rs 12 for every Rs 100 that it contributes and that amounts to exploitation. It is pointed out that Karnataka’s share in the divisible tax pool shared by the Centre was cut from 4.71% recommended by the 14th Finance Commission that was appointed under the UPA government to 3.64% under the 15th Finance Commission that was appointed by the Narendra Modi government. The state got about 22.5% less than it received under the 14th Finance Commission. Karnataka was the biggest loser of this sharing formula and has estimated that it has suffered a total loss of Rs 1.87 lakh crore.
The allocation of funds became uneven when different states developed at different pace, because the criteria for devolution are decided in such a way that the better off states give a prop and support to the laggards. But the situation should not become one in which the more developed states come to believe that they are being punished for their performance in social and economic fields. Karnataka also has complaints about inadequate GST compensation and the Modi government’s increasing use of cesses and surcharges to mop up revenue for the Centre while denying the same to the states. Through such means, it has been calculated, the actual share of taxes devolved to the states has been reduced to less than 30% as against the 42% recommended by the 14th Finance Commission and 41% recommended by the 15th Finance Commission. The state has other grievances also.
Karnataka’s complaints are shared by other Opposition-ruled states, too. Kerala Chief Minister Pinarayi Vijayan and his cabinet colleagues led a protest march in Delhi on Thursday, a day after Karnataka’s protest. Other Chief Ministers, including Tamil Nadu’s M K Stalin and Delhi’s Arvind Kejriwal, have thrown their weight behind the protest. Kerala has also filed a case in the Supreme Court against the central government’s discriminatory treatment of the state in financial allocation. West Bengal Chief Minister Mamata Banerjee has staged a dharna against the denial of funds under central schemes. Union Finance Minister Nirmala Sitharaman has denied the charges made by Karnataka and other states but the discontent and dissatisfaction over the Centre’s policies and practices is not all without basis. Politics should not ideally infect federal financial relations. It is wrong on the part of the Centre and the ruling BJP to dismiss the complaints and protests as politically motivated and, worse, tarnished as attempts to create a “North-South divide”.