Centre vs states row on tax devolution deepens

The Karnataka government led by chief minister Siddaramaiah and deputy chief minister DK Shivakumar took to Delhi's streets on Wednesday to protest alleged "financial discrimination against the state, prompting a furious response from the Union government that accused the Congress of fuelling a "separatist mentality" that wanted to "break up the country" based on outrageously "false claims".

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The protest marks deepening fissures between the BJP-led Union government and states ruled by parties opposed to the BJP, particularly those from southern India, with Kerala chief minister Pinarayi Vijayan set to hold a similar protest on Thursday, with support from Tamil Nadu.

Speaking at Jantar Mantar on Wednesday, Siddaramaiah said that it was a "historic protest" that sought to gain the attention of the central government and the people of the country. "We are raising the issue of discrimination meted out by the government of India to the state of Karnataka and other southern states," he said.

West While the three southern states are not alone in raising claims of alleged institutional and political injustice on the fiscal federalism front Bengal chief minister led a twoday protest in Kolkata earlier this week- they have brought to the fore the growing tension between the Prime Minister Narendra Modi-led BJP government and non-BJP ruled states.

The arguments are centred around two principle points; a continuous fall in the share of these states in central taxes, and the centre allegedly holding back non-formula driven grants and project support due to what these state governments allege is political vendetta.

In a post on X on Monday, Siddaramaiah said that under the term of the 14th Finance Commission (2015-2020), Karnataka received 4.71% of its tax share, which was reduced to 3.64% by the 15th Finance Commission (2020-2025), resulting in an estimated loss of ₹62,098 crore for Karnataka over five years.

"The finance minister subsequently declined the recommended special grant of ₹5,495 crore for Karnataka in the interim budget. Karnataka missed out on a total of 73,593 crore, including recommendations for 3,000 crore each for lake and water body development and peripheral ring road projects," Siddaramaiah claimed.