Siddaramaiah slams Centre for price rise, 'deteriorating' economy in Karnataka

Karnataka Chief Minister Siddaramaiah on Friday slammed the Centre for "failing to control steep price rise", and hit out at the previous BJP government for "deteriorating" the state's economy.

"The Central government failed to control steep increase in the prices of essential commodities and fuel during 2022-23. The common man is severely distressed by the steep increase in prices," Siddaramaiah said in his Budget speech in the Legislative Assembly.

To protect the common man from such an adverse environment has been the primary motivation behind the five 'guarantees' (poll promises of the Congress), he said.

The five 'guarantees' related to free bus travel for women, 200 units of free electricity, 10 kilograms of free foodgrains to the poor, Rs 2,000 for the woman head of the house and unemployment benefit of up to Rs 3,000.

Even though Karnataka is one of the main contributors to Centre's revenue collection, only 3.65 per cent of the divisible pool is devolved to the state by the Central government, the Chief Minister alleged.

"When compared to other states, our state has incurred huge losses due to the recommendations of the 15th Finance Commission, which meted out gross injustice to Karnataka," Siddaramaiah claimed.

According to Siddaramaiah, Karnataka has incurred a shortfall in tax devolution to the tune of Rs 26,140 crore in the past three years and Rs 10,858 crore in 2023-24 alone.

He sought to target the previous BJP government in the state for its "failure to protect the interest of the state".

"When the 15th Finance Commission submitted its report, although same party was in power at the Centre, the then state government failed to protect the interest of the state by being a silent spectator without putting pressure on the Central government to not to accept the anti-state recommendations of the Commission," Siddaramaiah said.

Since the devolution to the State was decreased in 2020-21 compared to 2019-20, the 15th Finance Commission in its interim report recommended a special grant of Rs 5,495 crore to Karnataka in 2020-21 but the Central government did not accept it, he alleged.

The Chief Minister also blamed the Centre for not releasing Rs 3,000 crore for holistic improvement of water bodies and Rs 3,000 crore for Peripheral Ring Road to decongest Bengaluru traffic.

"Though the Union Finance Minister has been elected from our state (to Rajya Sabha) and despite the claims of ‘double engine government’, the previous government failed in getting these grants from the Centre," Siddaramaiah said.

The GST compensation provided to the states has been discontinued since July 2022. Due to these factors, there is a shortfall of nearly Rs 26,954 crore in GST collections for the financial year 2023-24, which has caused a severe impact on the fiscal position of the state, he said.

According to him, the Centre did not share the cess and surcharges collected with the States as devolution. It is also gradually decreasing the grant in-aid allocation for the Centrally Sponsored Schemes (CSS).

"Since the central share to CSS is decreasing, it has become inevitable for the State to increase the state share for effective implementation of CSS. This has resulted in shortage of funds for implementation of new state schemes," the Chief Minister pointed out.

Siddaramaiah said the Centre is disbursing pension to only 14.13 lakh beneficiaries of the state under the social security pension scheme; the state government is paying pension to additional 64.21 lakh beneficiaries from its own resources.

The economy of Karnataka has deteriorated under the previous BJP regime, he alleged.

The provisional estimate released by the National Statistical Office showed the Gross State Domestic Product (GSDP) growth of 7.9 per cent in 2022-23 compared to the state GSDP growth of 11 per cent during 2021-22, Siddaramaiah pointed out.

The Foreign Direct Investment (FDI) inflow into the state during 2021-22 was USD 22 billion, which decreased to USD 10 billion in 2022-23, according to him.

The previous government, Siddaramaiah said, had given approval to a huge number of projects in major departments with scant regard to the principles of fiscal discipline.

During its tenure, the previous government had approved projects in water resources, urban development, public works and other departments of around Rs 94,933 crore, the Chief Minister said.

Further, in 2022-23 itself, the previous government had approved Rs 49,116 crore worth projects, although only Rs 33,616 crore budgetary provision was made in these departments and despite having balance cost of works of Rs 2,05,986 crore at the end of 2021-22.

Towards the end of 2022-23, a total of Rs 2.55 lakh crore works were pending and it requires nearly six years to complete these projects, Siddaramaiah said. He added that the huge balance cost of works left over by the previous government has posed a major challenge to his government in taking up new projects.

"Karnataka is known for strict adherence to fiscal discipline. However, the previous government has failed in following it during its tenure," the Chief Minister said.

He said the total outstanding liabilities of the state at the end of 2017-18 was Rs 2.46 lakh crore which has increased to Rs 5.17 lakh crore by 2022-23.

The debt repayment liabilities of the state were 9.5 per cent of the revenue receipts in 2017-18, which has increased to 15.06 per cent of the revenue receipts in 2023-24, Siddaramaiah pointed out.