K'taka's revenue deficit stems from financial discrimination by Centre’

NT Correspondent

Bengaluru: The Congress-led Karnataka government has issued a statement to clarify its position, asserting that the state has upheld strong fiscal discipline while the Union Government has engaged in reckless financial mismanagement. According to the government, the state's fiscal deficit is Rs 90,428 crore, which is 2.95 per cent of the Gross State Domestic Product (GSDP).

This figure remains comfortably below the three per cent limit set by the Fiscal Responsibility and Budget Management Act. Similarly, the state's total liabilities amount to Rs 7,64,655 crore, or 24.91 per cent of GSDP, which is also within the prescribed 25 per cent limit. These statistics affirm that Karnataka adheres to prudent financial management, rendering the claims of mismanagement unfounded. Furthermore, the government contends that Karnataka's revenue deficit stems from financial discrimination by the Union Government. The 15th Finance Commission has reduced the state's share in central tax devolution from 4.72 per cent to 3.64 per cent, resulting in a revenue loss of Rs 15,391 crore for the current year. Moreover, the Centre has increased tax collection through cess and surcharges, which are not shared with the states, thereby further depriving Karnataka of its equitable share.

The abrupt cessation of GST compensation has also adversely impacted the state's financial situation. In addition, despite the 15th Finance Commission's recommendations, the BJP-led Centre has denied Karnataka special grants, exacerbating the financial strain on the state. Highlighting the BJP’s fiscal hypocrisy, the state pointed out that while the party targets Karnataka, the real financial crisis lies with the Centre’s excessive borrowing.

In 2014, India's total debt was Rs 53 lakh crore, but under Prime Minister Modi's rule, it has surged to Rs 196.78 lakh crore by 2025, nearly quadrupling in just a decade. Despite the financial injustice from the Centre, the state has remained committed to fiscal responsibility, ensuring that its borrowings are well within the stipulated limits.