When Karnataka Chief Minister Siddaramaiah leads the ‘Chalo Delhi’ protest at Jantar Mantar in New Delhi today to highlight the “injustice” meted out to the southern states over their share of taxes, he hopes to transform it into a ‘South Tax Movement’. On this, Siddaramaiah has the support of the chief ministers of Kerala, Telangana and Tamil Nadu, who have closed ranks to claim that the southern states must preserve fiscal federalism.
Kerala is due to hold a similar protest on February 8, with Chief Minister Pinarayi Vijayan calling on all political parties to join the fight against the Centre. Tamil Nadu CM M K Stalin has pledged support and accused the Centre of misusing its powers to “stifle” the states’ development.
According to Siddaramaiah, Karnataka has lost Rs 62,098 crore over the past four years, with tax devolution falling from 4.71 percent to 3.64 percent. The current tax share is formulated by the 15th Finance Commission—while all of the state GST goes to the states, the central GST is pooled by the Centre and 41 percent of it is divided among the states; this formula is periodically reviewed.
Turning it into a pro-people protest, Siddaramaiah says he is raising his voice in favour of Kannadigas. The issue gathered steam after the interim budget presented last week, when Congress MP D K Suresh said the southern states would be forced to seek a “separate nation”, leading to protests across the state.
The friction is becoming increasingly abrasive, with the southern states complaining against the “faulty implementation” of GST. They claim that while they are big contributors to the tax kitty, they receive a disproportionately small share by way of devolution. The bulk of the tax share goes to the northern states, many of which are economic laggards that score low on growth and employment. This is looked upon as “discrimination”, besides interference in the states’ fiscal autonomy and efforts to raise resources and fund their welfare schemes.
In defence of the Centre, Finance Minister Nirmala Sitharaman has said the rate of devolution is fixed and the government is only implementing the Finance Commission’s recommendation without bias. She also hinted that Karnataka is not being fiscally prudent, indicating that the guarantee schemes of the Congress government are a drain on its resources. Instead of facing off, the Centre and states should work together for the benefit of the people.