Finance Minister Nirmala Sitharaman has levelled accusations against the Karnataka Congress government, alleging the misuse of taxpayers’ money for running advertisements against the Modi government. Sitharaman criticized the move, stating that such actions divert from addressing critical issues.
The accusations come amidst a backdrop of perceived tensions between non-BJP southern states like Tamil Nadu, Kerala, and Karnataka, and the Central government. These states have been engaged in what Sitharaman termed as a “sinister smear campaign,” attributing their debt crisis to the alleged disparity in fund allocation between northern and southern states.
Sitharaman countered these allegations, asserting that the Modi government has transparently detailed the process of fund allocation among states, emphasizing that it is done without bias. Despite explanations from the central government, the narrative of a north-south divide persists, fueled by accusations of unequal distribution of funds.
The Kerala and Tamil Nadu governments have taken their grievances against the Centre to the apex court, contending that the lack of fund allocation is hampering their governance. Tamil Nadu Chief Minister M K Stalin, in a letter shared on social media with Kerala CM Pinarayi Vijayan, accused the Union government of exerting arbitrary and discriminatory control over their deficit financing.
Stalin emphasized the readiness of the Tamil Nadu government to collaborate with Kerala in addressing the challenge posed by what they perceive as insufficient funds from the Centre. The CM expressed a commitment to cooperative federalism, calling for synchronised efforts to tackle the crucial issue.
The voices of DMK, Kerala CM Pinarayi Vijayan, and West Bengal CM Mamata Banerjee, though geographically distant, converged on the principle of upholding the constitution. Stalin asserted that their collective aim is to secure state autonomy and promote cooperative federalism, vowing not to rest until these goals are achieved.
Accusing the BJP-led Centre of undermining state autonomy, Stalin condemned the alleged misuse of powers under Article 293 of the Constitution, restricting the borrowing space of states. In response to the perceived neglect by the Centre, the DMK, along with other protesting states, plans to join a demonstration in Delhi to voice their discontent.
அதற்கான பதில் கடிதத்தில், மாநில அரசுகளின் நிதி நிருவாகத்தில் ஒன்றிய அரசு தலையிடுவதை எதிர்த்து உச்சநீதிமன்றத்தில் முறையீடு… pic.twitter.com/zlIFaiOQRP
— M.K.Stalin (@mkstalin) February 6, 2024
Karnataka Chief Minister Siddharamaiah has embarked on a ‘Chalo Delhi’ protest, asserting that it is not merely a battle between the BJP and the Congress. The Chief Minister, before departing for Delhi two days ago, highlighted the perceived economic injustices faced by Karnataka during the tenure of the 15th Finance Commission. He cited losses amounting to Rs. 1.9 lakh crores and expressed concerns over delayed disbursement of the state’s share in central taxes, insufficient relief measures for drought-hit farmers, and sluggish progress in securing clearance and funding for key state-sponsored projects.
Terming these issues as having a “detrimental impact on the lives of Karnataka’s populace,” Siddharamaiah, along with other Karnataka Congress leaders, organized a protest in Delhi on Wednesday. The Chief Minister directly accused Finance Minister Nirmala Sitharaman of denying funds to Karnataka, pointing out that she represents the state in the Rajya Sabha. He challenged her assertion that she cannot interfere in the decisions of an autonomous body like the Finance Commission.
In response, Sitharaman took to her social media handle to provide a detailed explanation of fund allocation and the formula followed. She clarified that the devolution of direct taxes to states is based on the Finance Commission’s recommendations. She further explained that SGST (State Goods and Services Tax) goes 100 percent to the states, while IGST (Integrated Goods and Services Tax) is collected and periodically reviewed by the GST Council. CGST (Central Goods and Services Tax) is divided as per the advice of the Finance Commission.
Sitharaman emphasized that the rate of devolution to states is determined by the Finance Commission’s recommendations, and she does not have the discretion to alter them. She refuted claims of partiality, stating that the systems are well-placed and accusations of economic injustice are false narratives promoted by vested interests.
During a Lok Sabha Question Hour, Sitharaman responded to a query raised by Hon’ble MP (LS) Shri Adhir Ranjan Chowdhury, stating, “I don’t have the right to change as per my whims & fancies that I like a state or not. Implementation of Finance Commission’s recommendation is done without any kind of fear or partiality.”
She clarified that constitutionally, unless the Finance Commission permits, she cannot make discretionary decisions. Sitharaman stressed that if the state government is spending on something it is not supposed to, she is not answerable for it. She urged responsible budgeting, stating, “If the expenditure is going into areas which can’t be sustained by your budget, then I’m not answerable for it.”
Devolution of Direct Taxes to states happens as per the recommendation given by the Finance Commission.
The SGST goes 100 per cent to the states. IGST is collected because it involves a lot of inter-state payments and is periodically reviewed by the GST Council. Because the… pic.twitter.com/tb4TGzrlNx
— Nirmala Sitharaman Office (@nsitharamanoffc) February 5, 2024
Finance Minister Nirmala Sitharaman launched a scathing attack on the Karnataka government, accusing it of using taxpayers’ money for full-page national newspaper advertisements containing false claims. Sitharaman pointed out two specific claims that she deemed “outrageously false.”
Firstly, she contested the Karnataka government’s assertion of receiving zero funds for drought and disaster relief from the Central Government. Sitharaman clarified that a total of Rs 12,476 Crores had been allocated for both disaster management and capital investment.
Secondly, she refuted the claim of a special grant, emphasizing that it was not part of the final recommendations by the Finance Commission. Sitharaman attributed these alleged misleading claims to a “mindset of separatism,” echoing a statement made by the Deputy CM’s brother. She accused the Congress of aligning with those advocating for the division of the country.
Sitharaman highlighted that Karnataka has experienced a significant increase in tax transfers and grants from the Centre, rising almost 25 percent. She asserted that the Congress government was resorting to misleading claims to divert public attention from its failure to fulfill election promises made last year.
#WATCH | Union Finance Minister Nirmala Sitharaman says, "Using taxpayers' money, the Government of Karnataka has given full-page national newspaper advertisements…Six claims…but two are outrageously false claims…One, zero has been given as drought, disaster relief by the… pic.twitter.com/NEDJb13HXN
— ANI (@ANI) February 7, 2024
Sitharaman referred to a statement by Karnataka CM’s advisor in January, admitting that the five poll promises had become a substantial financial burden, requiring Rs 58,000 crore allocation. Six months earlier, Deputy CM DK Shivakumar had mentioned the need to set aside Rs 40,000 crore for the same promises, conceding that they couldn’t focus on development.
Sitharaman reminded of Siddharamaiah’s statement projecting an annual cost of Rs 60,000 crores for the poll promises. She accused the Karnataka government of making grand promises with budgetary implications and then conveniently shifting blame to the Centre when fiscal constraints became apparent.
Highlighting the growth in tax devolution during the Narendra Modi government’s tenure, Sitharaman stated that the net proceeds of Union taxes had risen from Rs 81,795 crore during 2012-14 to over Rs 2.8 lakh crores by January 10, 2024. She dismissed the Karnataka government’s claim of suffering huge losses due to the 15th Finance Commission as “patently wrong and mischievous.”
BJP MP Nishikant Dubey questioned the Congress’s potential motivation for creating a north-south divide, emphasising the unity of India. He noted that Tamil Nadu and Kerala received more funds than Uttar Pradesh and Bihar, countering the narrative of regional bias.
Critics argue that states making tall poll promises are struggling to implement them, facing increasing debt burdens. With the disruption of illegal money channels and potential financial emergencies, there is speculation that funds could be diverted for voter bribery in upcoming Lok Sabha polls. The opposition’s united front appears driven by a desire to unseat the NDA government, hoping for financial relief under a future Congress-led government.
Meanwhile, the Karnataka State Contractors Association has accused the Congress government of demanding a 40 percent bribe, signalling potential trouble for the Siddharamaiah dispensation. This accusation comes after a similar claim against the previous BJP government, suggesting broader issues within the state’s political landscape.
As the political discourse intensifies, the accusations and counter-accusations reflect the complexities of fiscal governance, electoral promises, and the potential challenges faced by state governments. The allegations of bribery within the Karnataka government add another layer of complexity to the political dynamics in the state.