‘Separatist Mindset’: FM Sitharaman On Karnataka Govt’s Discrimination Charge Against Centre

Finance Minister Nirmala Sitharaman on Wednesday lashed out at the Congress government in Karnataka, accusing it of harbouring a “separatist” mindset and spreading a “false narrative” on the issue of fund allocation by the Centre to states.

Her statement comes in the backdrop of top Congress leaders from Karnataka led by Chief Minister Siddaramaiah holding a protest at the Jantar Mantar here, claiming “injustice” was meted out to the state by the central government in devolution of taxes and there was delay in providing drought relief.

While giving a point-by-point rebuttal to the claims made by the state government, the finance minister, who was joined by fellow Karnataka MP and Union Minister Pralhad Joshi, accused the chief minister and his colleagues of making “outrageously false” allegations and said no GST compensation amount due to the state.

Speaking to reporters, she also took a strong exception to an advertisement issued by the state government in national dailies to highlight its allegations against the central government.

“These claims come from a separatist mindset. …The Congress is with those who want ‘tukde tukde’ (break) of the country,” she said claiming that the advertisement promotes such a language.

In this context, she also cited the remarks of Deputy Chief Minister D K Shivakumar’s brother and MP D K Suresh, who had suggested that “South India may seek a separate country” if the Centre’s alleged discrimination continues, to slam the Opposition party.

Sitharaman, who is a Rajya Sabha member from Karnataka, gave out figures of the funds allocated to the state from the Centre to reject the charges. She claimed that the Siddaramaiah government is feeling the heat due to the financial burden of nearly ₹58,000 crore for the implementation of his party’s poll promises.

She said the state government has claimed that the Centre has not given a special grant of ₹5,495 crore as recommended by the 15th Finance Commission.

“I want to clearly state that the recommendation did not form part of the final report of the 15th Finance Commission. The question of not accepting does not arise at all,” she said.

Over and above the recommendation of the Finance Commission, the Centre has, however, provided ₹6,279.94 crore as an interest-free loan for 50 years to the state.

The FM also asserted that the devolution of taxes and grants to Karnataka and all other states have been done in line with the Finance Commission award with no discrimination whatsoever.

During the 14th Finance Commission (FC) five-year award period (2015-15 to 2019-20), Karnataka received ₹1,51,309 crore as tax devolution.

However, in the first four years of the current 15th FC period, Karnataka would have already received ₹1,29,854 crore by March 2024, she said.

The Centre has projected a further release of ₹44,485 crore in the Interim Budget for FY2024-25, taking the total to ₹1,74,339 crore in five years. This is higher than the 14th FC period despite the precipitous drop in revenue during the Covid-19 period, she said.

“In short, despite the exceptional circumstances arising from the pandemic which depressed central revenues, the Government of Karnataka will be getting substantially more as devolution during the first five years of the 15th FC period than in the 14th FC period,” she said.

She alleged that to inflate its false claims, the Karnataka government has even included shortfalls for the next two financial years.

The Karnataka government’s claims on cess and surcharge are “misleading and self-serving”, Sitharaman claimed adding the large part of the cess collection comprises GST compensation cess. This cess does not belong to the Centre and goes entirely for the benefit of the states.

She also rebutted the state government’s claim that it has suffered huge losses due to the 15th Finance Commission saying that it is factually “full of errors” and “a politically motivated claim.”

The FM said the Karnataka government has projected a massive false claim of GST compensation dues. But in reality, there is no GST compensation amount due to the state.

“The GST compensation period ended in June 2022 and in the first five years of the transition period, we have already given ₹1,06,258 crore to the state. No amount is due to Karnataka,” she added.

On the state government’s charge on the allocation of funds for drought relief, Sitharama said the Centre has already allocated the state disaster relief fund (SDRF) and any relief over and above SDRF is released upon submission of a memorandum by the state.

She also said that the Centre has made a budget provision for the Upper Bhadra Project and it will be sanctioned.