Karnataka | Why Congress is weaving its poll narrative around Centre's 'fiscal injustice'

With Chief Minister Siddaramaiah, Deputy Chief Minister DK Shivakumar and other cabinet ministers raking up the issue of tax share denial by the Centre in the ruling party’s Lok Sabha polls campaign, it is amply clear that the Congress is making the Centre’s ‘fiscal injustice’ its poll plank to combat BJP’s Modi factor and Hindutva agenda.

The Supreme Court’s recent move to ask the Centre to come out with its stance on the complaints of bias from the state governments came as a shot in the arm for the ruling Congress in Karnataka, which is set to take on BJP in the first phase of polls. While the BJP is banking on the Modi factor, discrediting guarantees of the Congress government, its pan India agenda of holistic development and of course Hindutva, the Congress is looking to tame the BJP with time tested formula of raking up regional issues, especially, demand of southern states for higher shares in the devolution of taxes.

Faux pas by Centre

The BJP, which was caught unaware, is now looking at Prime Minister Narendra Modi, who is visiting the state on April 14. In its delayed comprehension, the party realised that it got ambushed by the Congress on the issue of share in the devolution of taxes and delay in releasing drought relief to Karnataka.

Even Union Finance Minister Nirmala Sitharaman’s admission in this regard damaged the BJP to a certain extent and helped the Congress to make regionalism and federalism as poll plank. “We are rather looking at Modi as a saviour now,” said a senior BJP functionary, pleading anonymity.

Sitharaman’s public admission that “there was indeed delay in providing drought relief to Karnataka” came as a boost to the Congress, even though she attributed the delay to “extensive procedural requirement”. The Congress took advantage of the ‘admission’ and slammed the Centre for doing injustice to Karnataka.

Thanking the finance minister for acknowledging the injustice done to Karnataka, Shivakumar said, “This justifies Congress MP DK Suresh’s campaign – ‘My tax, my right’.” The Congress has turned this into a poll issue. Addressing an election rally in Bengaluru recently, Siddaramaiah said the state has been subjected to “extreme injustice” in devolution of the tax share. He sought an explanation from the 26 BJP MPs representing Karnataka on their role in ensuring justice to the state.

Reduction of tax share

According to Dr M Govinda Rao, former member of the 14th Finance Commission and former director of National Institute of Public Finance and Policy (NIPFP), the ties between the Union government and the southern states in general and Karnataka in particular have come under considerable strain in recent days.

At the heart of the tension is the substantial erosion in the share of the state in the devolution of central taxes from 4.713% under the 14th Finance Commission to 3.647% under the 15th Finance Commission. Accusations have been flying thick and fast. The state government has accused the Union government of denying it the amount of money that it would have accrued, had the 14th Finance Commission’s formula been applied.

BJP chose to keep mum

It is significant to note that while the report of the 15th Finance Commission was submitted in October 2020 for the period covering 2021-22 to 2025-26, the issue of reduction in the tax share has come up only now following presentation of the 15th Finance Commission report in the Parliament.

Rao argues that the BJP, which was ruling till May 2023, did not want to raise the issue with the Union government and the Congress, which came to power last year, raised the issue as the implementation of its five poll guarantees created substantial fiscal pressure on the state government. “The fact of the matter is that that state got 1.066% lesser share of tax devolution under the 15th Finance Commission as compared to the 14th Finance Commission.”

A shot in the arm

The Supreme Court’s observation over the issue has come as a shot in the arm for the state government.

Karnataka Congress president DK Shivakumar publicly declared that following the Supreme Court’s direction to the Centre, the Congress will intensify its campaign against ‘proved’ financial injustice meted out by the Central government, making the issue the “cornerstone of its election campaign”.

Chief Minister Siddaramaiah declared that “our fight against injustice done by the Union government in the provision of drought relief will continue not just on the streets, but also in the courts. We will expose the Centre’s lies one by one and expose its real face to the people of the state”.

'My tax, my right' campaign

The Congress initially struggled to establish a compelling narrative to combat BJP’s dominance, but it now discovered what it believes is a potential strategy. “My tax, my right” campaign directly targets Prime Minister Narendra Modi-led Central government. Siddaramaiah has been relentlessly pursuing ways to draw attention to what he terms as “bias of the Union government”.

“Karnataka’s interests are being compromised by the Modi government. People of the state have also realised this. It is dominating the social media narrative seeking fiscal justice,” said Basavaraj Rayareddy, economic advisor to the chief minister.

Mobilising electoral support

The Congress is hoping that injustice by the Centre will galvanise electoral support for the party as people are peeved with the north-south disparity.

The party leaders are of the opinion that at the heart of Congress’ effort lies a steadfast commitment to addressing what it views as neglect from the Central government. The party has been pursuing the issue aggressively right from the beginning. This was evident from the mass protest in New Delhi led by Chief Minister Siddaramaiah and the passing of a resolution in the Karnataka assembly against it.

Notably, sitting MP and Congress candidate from Bengaluru Rural constituency DK Suresh on February 1 struck a discordant note in his reaction to the Union Budget presented by Union Finance Minister Sitharaman by articulating the Congress’ line of attack keeping in view the upcoming Lok Sabha polls.

Separate nation row

Accusing the Centre of discriminating between north and the south, Suresh cautioned the Centre of southern states demanding a separate country due to imposition of Hindi.

Upholding Kannada pride, he said the imposition of Hindi and fiscal discrimination will be detrimental to the federal structure of the country. His separate nation remark sparked a major row and drew flak from the BJP. However, the comment evoked pro-Kannada pitch to counter the BJP’s Hindutva agena. Supporting Suresh, Chief Minister Siddaramaiah and Deputy CM Shivakumr targeted the BJP-led Centre for ‘doing injustice to Kannadigas’ on flood relief, devolution of funds and infrastructure allocations.

Taking the issue further, the Karnataka government filed a petition under Article 32 of the Constitution, intended to enforce citizen’s fundamental rights. “The action of the central government in denying the financial assistance to the state is ex facie violative of the fundamental rights of the people of Karnataka under Article 14 (equality) and 21 (life and personal liberty),” says the petition.

Interestingly, Tamil Nadu and Kerala have also filed similar petitions accusing the Centre of deliberately delaying or denying financial help to states. However, the Centre defended itself by saying that if the state indulged in reckless borrowing, the sovereign rating would fall and the “entire edifice of federal structure in the country would collapse like a pack of cards”. But, in the din of the poll campaign, no one is ready to buy the clarification of the Centre in this regard. A senior Congress leader told The Federal, “Discrimination will certainly be our poll plank. But, the big question is – Will ‘My tax, my right’ campaign fetch votes.”