CM Siddaramaiah: States Must Be Valued Beyond Just Revenue Sources in Union Budget

Bengaluru, Jan 31 (NationPress) In addressing significant requests in the Union Budget for 2025-26, Karnataka's Chief Minister Siddaramaiah emphasized on Friday that states ought to be regarded as more than just revenue-generating entities; the central government should approach their financial challenges with compassion.

The Chief Minister stated that key requests from the state have been communicated to Union Finance Minister Nirmala Sitharaman for consideration in the upcoming Union Budget.

CM Siddaramaiah noted that the central government's biased stance towards Karnataka is widely acknowledged.

For a robust federal system, he recommended that the central government implement a just, transparent, and equitable policy.

Resource distribution, particularly regarding tax allocations, should be determined by scientific criteria, he insisted.

Specifically, the developmental needs of prominent states like Karnataka must be acknowledged, with resource distribution favorably adjusted towards them. He argued that positively addressing their needs will ultimately benefit the nation since the advancement of these states contributes to the country's overall prosperity.

“In this regard, our administration has persistently highlighted the continuous injustices faced by Karnataka and has been advocating for their resolution. As we approach the Union Budget presentation set for February 1, 2025, we have already submitted our list of requests to the central government,” the CM stated.

Among the key requests, he mentioned that “Karnataka is being denied its fair share from the cess and surcharges collected by the central government. The proportion of cess and surcharges in the total tax revenue has risen from 8.1% in 2010-11 to 14% in 2024-25, consequently diminishing Karnataka’s tax allocation. Furthermore, central assistance grants continue to decline annually. Thus, cess and surcharges should either be eliminated or incorporated into the total tax pool and fairly distributed among states,” he asserted.

The service tax threshold has remained unchanged since 1985. Given the economic growth over the years, a constitutional amendment is required to raise the maximum service tax limit, the CM argued.

The central government owes Karnataka ₹2,461.49 crore under the Minimum Support Price (MSP) scheme. Since the state has already compensated farmers from its own funds, this outstanding amount should be released without delay, CM Siddaramaiah urged.

In 2023, 223 out of 236 taluks in Karnataka experienced drought, impacting 48 lakh hectares and leading to a loss of ₹35,162 crore. Although seeking ₹18,171 crore in relief, Karnataka received only ₹3,454 crore from the NDRF. Additionally, Bengaluru faced severe flooding in 2024, yet has yet to receive any assistance.

The allocations from the National Disaster Response Fund (NDRF) and State Disaster Response Fund (SDRF) to Karnataka have consistently been unfair. The NDRF framework must be reformed to ensure transparent and prompt relief distribution, with criteria updated to better support drought-affected states, according to the CM.

While railway projects fall under the Union List, they place a significant financial load on state governments. Karnataka is currently responsible for the entire cost of land acquisition and 50% of construction expenses. This should be adjusted so that the central government finances the complete construction costs and half of the land acquisition expenses, CM Siddaramaiah stated.

The Mahadayi Kalasa Nala project, authorized in March 2023 for ₹995.30 crore, is currently stalled due to Goa’s objections regarding 26,925 hectares of forest land. The National Wildlife Board (NBWL) and National Tiger Conservation Authority (NTCA) must expedite their approvals. Likewise, the Banduri Nala diversion project, requiring 28 hectares of forest land, needs immediate approval, he demanded.

The Krishna Water Dispute Tribunal allocated 173 TMC of water to Karnataka in 2010. Of this, 130 TMC is designated for the ₹51,148 crore third-phase Krishna Upper Basin Project. However, the central government has refrained from publishing the tribunal’s ruling in the Gazette due to objections from other states. The Centre must address this situation promptly, CM Siddaramaiah asserted.

The Mekedatu project, intended to provide drinking water to Bengaluru and produce 400 MW of power, requires immediate approval from the central government, he stated.

Karnataka’s Western Ghats region encounters distinct environmental challenges. The Centre should allocate ₹10,000 crore over the next five years for its development and conservation, CM Siddaramaiah insisted.