Karnataka’s money used to reward 'corruption-ridden', 'misgoverned' states: CM Siddaramaiah

Chief Minister Siddaramaiah on Saturday (October 12) accused the Centre of doing injustice to Karnataka by allocating less funds to it in the tax devolution and said questions are needed to be raised about the state's hard-earned contributions being used to reward "misgoverned and corruption-ridden" states.

Since Prime Minister Narendra Modi's government came to power, Karnataka has "suffered", the chief minister alleged, and stressed on the need to initiate a public debate on how Karnataka, while respecting the federal structure, can secure its rightful share.

"The persistent injustice in tax distribution by the NDA government towards Karnataka is undeniable, with the latest tax share figures serving as clear evidence. Out of a total of Rs 1,78,193 crore allocated to 28 states, Karnataka has been given a meagre Rs 6,498 crore. This gross injustice calls for every Kannadiga, irrespective of caste, religion, or political affiliation, to pledge to raise their voice against such discrimination," Siddaramaiah said.

Fight for fairness

“Let this Vijayadashami, a symbol of victory over injustice, mark the beginning of our collective fight for fairness,” he said in a statement.

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Seeking to know what wrong has Karnataka done to deserve such neglect, the CM said, the question every proud Kannadiga must ask the central government is why the state's hard-earned contributions are being used to “reward misgoverned and corruption-ridden states”.

"Uttar Pradesh, infamous for its poor governance, has been allocated Rs 31,962 crore; Bihar, Rs 17,921 crore; Madhya Pradesh, Rs 13,987 crore; and Rajasthan, Rs 10,737 crore. Why should the sweat and toil of Karnataka fuel the growth of states that have lagged behind due to maladministration?" he questioned.

Noting that despite contributing significantly to the nation's tax revenues, Karnataka receives only 3.64 per cent of the total tax share, far below the 17.93 per cent given for Uttar Pradesh, 10.05 per cent given for Bihar, 6.02 per cent given for Rajasthan, and 7.85 per cent given for Madhya Pradesh, Siddaramaiah said, the central government's discriminatory policies are evident in these figures.

Tax share reduced

While Karnataka excels in governance and development, the financial rewards are directed towards poorly governed states, he said.

Further he pointed out that the 14th Finance Commission set tax share Karnataka receives at 4.713 per cent, but the 15th Finance Commission unjustly reduced it to 3.647 per cent, costing the state approximately Rs 62,275 crore between 2021-2026.

Even when the Finance Commission recommended a special grant of Rs 5,495 crore to compensate for the loss, the central government refused to release the funds, further aggravating the injustice, Siddarmaiah said.

In total, Karnataka lost a staggering Rs 79,770 crore due to unfair tax distribution during this period, he said.

Leading in GST growth

Although Karnataka makes up only 5 per cent of India's population, it contributes 8.4 per cent to the nation's GDP, the CM said, the state ranks second in GST collection and leads the nation in GST growth with a 17 per cent increase.

Also Read: Karnataka: Injustice in tax devolution, will fight it out, says D K Shivakumar

"However, Karnataka receives only 52 per cent of the GST it collects, losing Rs 59,274 crore since the introduction of GST. Even though Karnataka contributes Rs 4.5 lakh crore to the national exchequer annually, the state only receives Rs 45,000 crore in tax share and Rs 15,000 crore in grants and a mere 15 paise for every rupee contributed. How long must we tolerate this gross injustice," he asked.

Even though the size of the Union Budget doubled in the past eight years from Rs 24.42 lakh crore in 2018-19 to Rs 48.20 lakh crore in 2024-25, Karnataka's share has stagnated, Siddaramaiah said. In 2018-19, the state received Rs 46,288 crore, while in 2024-25, it is allocated only Rs 44,485 crore, with an additional Rs 15,299 crore in grants.

Denied rightful share

Karnataka should receive a minimum of Rs 1 lakh crore annually, but it has been denied its rightful share, he said.

The 15th Finance Commission recommended Rs 5,495 crore in special grants and additional funds of Rs 6,000 crore for Bengaluru's Peripheral Ring Road and water resource projects. However, Union Finance Minister Nirmala Sitharaman rejected these recommendations, resulting in Karnataka losing Rs 11,495 crore, he added.

India's federal structure relies on cooperation between the union and the state governments, but the central government's biased approach towards Karnataka and other southern states threatens this balance, Siddaramaiah said.

The dream of a 5 trillion USD economy can only be realised with the unwavering contribution of states like Karnataka, yet the central government continues to treat them unfairly.

‘State govts marginalised’

The abolition of the Planning Commission and its replacement with the NITI Aayog marginalised the state governments, he said adding that changes to the objectives of the 15th Finance Commission drastically hurt the southern states.

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Karnataka's tax contributions are being siphoned off to states that have failed to manage their resources, leaving Karnataka struggling during crises like floods and droughts without adequate support from the Centre, the CM said.

"What use is taxation if Karnataka's resources don't serve the people of the state? If the hard-earned money of Kannadigas is not used to wipe their tears in times of crisis, what is the purpose of this federal structure? These are the questions we must confront," he added.

(With agency inputs)