While Congress swept to power in Karnataka riding on a wave of freebie promises, the state is apparently facing an acute dearth of funds, forcing CM Siddaramaiah to write a letter to Finance Minister Nirmala Sitharaman seeking special grants for the state.
Confronted with significant financial challenges concerning the funds required to implement the five poll guarantees and the initiation of routine developmental projects, Chief Minister Siddaramaiah of Karnataka penned a letter to Union Finance Minister Nirmala Sitharaman on August 19th, requesting the disbursement of special grants and state-specific funding amounting to Rs 11,000 crore, as suggested by the 15th Finance Commission.
In his letter to the finance minister, Siddaramaiah asked the federal government to allocate Karnataka Rs 6,000 crores as outlined by the 15th Finance Commission in its conclusive report for the years 2021-2026. This allocation was intended for the comprehensive enhancement of water bodies in Bengaluru and the construction of the peripheral ring road.
“However, the Government of India, in its explanatory memorandum, stated that ‘consideration will be given to the recommendation on specific grants’ while taking into account the untied resources with state governments and the fiscal commitments of the central government. Despite this, no grants have been released to the state of Karnataka so far. This has dealt a significant blow to the state’s fiscal position, which is already strained due to severe cuts in tax devolution,” a report published by TOI quoted the letter as saying.
Furthermore, Siddaramaiah highlighted that the report of the 15th Finance Commission for the fiscal year 2020-21 had suggested Rs 5,495 crore as special grants for Karnataka for that period. In an earlier section of his correspondence, the chief minister pointed out that the state had borne a significant brunt due to the adoption of the Income-Distance criterion by the commission.
Siddaramaiah observed that the inclusion of IT-related services had markedly improved the state’s Gross State Domestic Product (GSDP) in the 2011-12 series. However, there was an absence of proportional input from these services in terms of state taxes, given that the export of IT services is subject to zero-rating.
Karnataka has been plagued with financial crisis for some time now. In July this year, Deputy CM DK Shivakumar candidly admitted that the Karnataka government was suffering from a paucity of funds to bankroll development projects this year as they had budgeted Rs 40,000 crores for implementing the five election guarantees.
Shivakumar made these comments in response to inquiries regarding the discontent expressed by certain Congress MLAs who have requested funds for the development of their respective constituencies. The Congress legislature party (CLP) has scheduled a meeting this evening to address the concerns of these MLAs who are disappointed that their constituencies have not received adequate development funds.
