Bengaluru:Karnataka Chief Minister Siddaramaiah sought a greater devolution by the Centre on Thursday as he asserted that the southern state faced the challenges of urbanisation and regional imbalances, especially in the Kalyana Karnataka region.
Siddaramaiah made the remarks in his address to the Chairman of the 16th Finance Commission Arvind Panagariya and its members at a meeting here.
"The total of all the losses amount to Rs 79,770 Crores during the 15th Finance Commission period," Siddaramaiah said. Bengaluru, he added, needs an investment of Rs 55,586 crore over the next five years out of which the State requested a grant of Rs 27,793 crore. Similarly, for the equitable development of the Kalyana Karnataka region, the State is investing Rs 25,000 crore and requested a matching grant of Rs 25,000 crores over five years from the 16th Finance Commission.
"Fiscal federalism, as enshrined in our Constitution, is fundamental to promoting Cooperative Federalism, a term our Prime Minister has coined. Article 280 mandates the appointment of the Finance Commission as an expert, independent, and impartial body to make recommendations on sharing of tax proceeds between the Union and the states and among the states," the Chief Minister said in his address.
Karnataka has been central to India's growth story and contributes approximately 8.4% to the national GDP with only about 5% of the population, he said, adding the State ranks 2nd in total GST contribution to the country.
"Despite Karnataka's substantial contribution of about Rs 4 lakh crores to the Gross Tax Revenue of the Union every year, the state gets about Rs 45,000 crore in the form of devolution and about Rs. 15,000 crore grant-in-aid. This means that for every rupee Karnataka contributes, only 15 paise is returned to the state," Siddaramaiah said.
To ensure effective disaster mitigation and timely relief and rehabilitation measures in the highly vulnerable region of Western Ghats, the State requested a grant of Rs 10,000 crore.
According to him, the 15th Finance Commission's award reduced Karnataka's share sharply from 4.713 to 3.647. This has led to a loss of Rs 68,275 crore during the five-year period from 2021-26, he said.
The Finance Commission was conscious of the drastic cut Karnataka received and recommended state-specific grants of Rs 11,495 crore, the Chief Minister said, adding, that the Government of India, however, has not accepted the recommendation. "So, Karnataka was deprived of these grants as well."
Due to the disproportionate weightage given to equity, Karnataka and similarly placed States ended up getting penalised for their good performance, both fiscally and demographically, the Chief Minister said.
He said Karnataka has seen a revenue transfer of Rs 35,000-40,000 crore per year to other States, amounting to 1.8 percent of its GSDP, during the 15th Finance Commission period. "The figure is astounding because the net transfers outside of Karnataka amount to about 50 to 55 percent of the total revenues it generates."
The CM requested that the commission recommend that Vertical Devolution be at least 50% of the divisible pool and that the cesses and surcharges should be capped at 5% of gross tax revenue. "Anything exceeding that should be a part of the divisible pool. All non-tax revenues of the Centre should be included in the divisible pool of taxes by bringing the necessary Constitutional amendment," he said.
"A strong Karnataka is crucial for a strong India. States with strong contribution to the country’s GDP and Gross Tax Revenue, help build the nation in more ways than one. Seven crore Kannadigas, while being proud of their contributions to the country, have aspirations. They look up to the Commission to advocate a balanced and fair approach to sharing of resources," the CM added.
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