Karnataka to seek representation of South Indian states in 16th Finance Commission

Addressing the media after the meeting, Minister for Revenue Krishna Byre Gowda said that the Cabinet discussed Karnataka’s concerns such as “penalising” states with better population control, regional economic disparities, fiscal responsibility, and a fair share of central surcharges, including from the GST.

The Cabinet also decided to seek increased involvement of the state in setting the Terms of Reference and to underscore the need for addressing the injustice meted out to Karnataka by the 15th Finance Commission.

The meeting considered 34 subjects, including the 16th Finance Commission and the Kannada language.

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‘Frame ToR after seeking states’ views’

Explaining the need for making such decisions, Byre Gowda said that the federal structure would be good only if the state had a healthy financial situation.

“The Cabinet had discussed in detail the 16th Finance Commission and made major decisions as well. First, the states that controlled the population were penalised but those which failed were rewarded by the 15th Finance Commission. This has affected the state as well. We will appeal to the Finance Commission to provide weightage to those states that performed well in controlling population,” he told reporters.

“Second, we have an impressive income from Bengaluru. The state is not getting any tax revenue from IT exports. But while calculating the per income capita of our state, they are also considering income from IT. However, the per capita income is meagre in backward regions,” he pointed out.

“The per capita income of Bengaluru is not the same as in districts like Chamarajanagara, Kalaburagi, and Yadgir. However, when the average per capita income (of all districts) is calculated, the high per capita income of the state has been affecting our weightage. Hence, we have decided to appeal to the commission to consider regional differences while making decisions,” the Minister explained.

“Third, the previous Finance Commission had provided Revenue Deficit Grant to all those states that have taken loans violating the FRBM Act (Fiscal Responsibility and Budget Management Act, 2003). But it failed to provide any incentive to those who have maintained good fiscal responsibility and tax administration,” he further said.

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Representative of the South

Stating that Karnataka was not against helping debt-ridden states, Byre Gowda said the Cabinet has decided to urge the Commission to consider good performance in terms of finance as well. The state would also appeal to consider the interests of all those states that were financially affected by the implementation of the GST.

“There was not even a single member from the southern states in the 15^th Finance Commission. We are not demanding representation from every state in the 16^th Finance Commission. If there is at least one member from the South, they can speak in favour of all southern states. Hence, we will demand the government to appoint at least one member from the South in the new Finance Commission,” added the Minister.

The state government would write to the Union government requesting it to consult and consider the states’ opinions while setting up “Terms of Reference (ToR)” of the new Finance Commission.

“The Finance Commission is an autonomous and independent body. If the Union government unilaterally sets up the ToR, then the Commission members won’t listen to the states. We are hopeful of getting justice,” Byre Gowda added.

On whether Karnataka would approach like-minded states, for making a joint appeal, he said the chief minister would make a decision. “We are thinking of approaching those states, cutting across party lines, which have developed in all sectors including tax, social, and education.”

He also said that the state has set up a technical cell to assist the government in preparing a memorandum to submit to the 16^th Finance Commission.

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Signboards to prominently feature Kannada

In other significant decisions, the Cabinet approved the Kannada Language Comprehensive Development (Amendment) Ordinance.

According to the ordinance, 60 percent of space on signboards of commercial establishments, industries, hospitals, and institutions should be in Kannada.

As a one-time measure, the Cabinet sanctioned an increase in the upper age limit by three years of eligible candidates in all the categories taking competitive exams conducted by the Karnataka Public Service Commission. This is to fill vacancies in accordance with the Karnataka Gazetted Probationers Rule,1997.

The Cabinet also approved the ₹45 crore Chamundeshwari Temple Development Scheme under the Union government’s Pilgrimage Rejuvenation and Spiritual Augmentation Drive (Prasad).

To avoid technical hurdles, the Cabinet gave the nod for the office of profit to MLAs Basavaraj Rayreddy, BR Patil and RV Deshpande, who were recently appointed financial advisor and advisor to the Chief Minister and Chairman of the Administrative Reforms Commission, respectively. The approval was granted under the Karnataka Legislature (Prevention of Disqualification) Act.

In light of the fiscal impact on the transport department due to the Shakti scheme, the Cabinet approved a waiver of ₹581.47 crore in revenue owed by the state transport corporations to the government.

The Cabinet approved 43 development works totalling ₹800 crore in Bengaluru city.