PM Modi tried to cut funds to States, says Al Jazeera-TRC report quoting NITI Aayog CEO

The website quotes an exclusive report from Reporters Collective based on the 'revelations' by a former bureaucrat who is now Niti Ayog CEO.

BySouth First Desk

Published Jan 18, 2024 | 4:41 PMUpdatedJan 18, 2024 | 5:36 PM

Modi cutting states fund

In an explosive allegation against Prime Minister Narendra Modi, Al Jazeera on Thursday, 18 January, claimed that he held “backdoor negotiations with the Finance Commission of India” to “cut funds allocated” to the states.

The scoop by a journalists’ group, The Reporters Collective, said the attempt was made by Modi in 2014 but he had to “back off” after the commission’s head “resisted” the move.

The report reveals how the forum accessed this startling information: “These revelations of financial haggling and behind-the-scenes manoeuvring in the making of the federal budget came from BVR Subrahmanyam, the CEO of the government think-tank NITI Aayog. As a joint secretary in the PMO, he was the liaison in the backdoor negotiations between Modi and the chairman of 14th Finance Commission, YV Reddy.”

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‘Wanted to cut down from 42 to 33 percent’

The report claims the commission recommended states “should get 42 percent of the share of central taxes”, up from “32 percent”.

However, “Modi, now the prime minister, and his Ministry of Finance, wanted to keep the states’ share of taxes down at 33 percent and a larger portion for the federal government”, it said.

Subrahmanyam said that a “tripartite discussion between Dr Reddy, me and the prime minister” about the figure took place.

The report says: “The conversation lasted two hours, Subrahmanyam said, but Reddy was unyielding. Subrahmanyam recalled Reddy, telling him in ‘good south Indian English: ‘Appa [Brother], go and tell your boss [the prime minister] that he has no choice’.”

Subrahmanyam reportedly “shared the information” at a seminar on financial reporting in India, organised last year by a non-governmental think-tank, Centre for Social and Economic Progress.

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‘Attempts to cover the truth’

The “revelations” reported by Reporters Collective members Shreegireesh Jalihal and Nitin Sethi also relate to attempts to “cover the truth” about the country’s financial condition.

The report claims the Modi government “eroded the state’s tax resources through a national goods and services tax (GST)” to create a “single market”. But “states are being increasingly choked for revenue,” the report said, quoting Subrahmanyam.

The Reporters’ Collective says it “independently verified Subrahmanyam’s claims against budget and other documents going back a decade”.

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‘We live in strange times’

Reacting to the report, Data Scientist and Author RS Nilakantan told South First that the funds allocated to the states considering the revenue collected from them has gone down in the 10 years starting from 2011-12.

He is the author of the bestselling book South vs North, which, among other topics, delves into the inequities in the devolution of funds to the states, particularly those in the South.

“This revelation makes obvious the malicious intent. The data was there for all of us to see. In the 10-year period since 2011-12, the overall transfer, as a ratio of total revenues that the Union collected, to the states, has actually gone down. This despite the 14th Finance Commission increasing the allocation ratio by 10 percentage points,” Nilakantan said.

Referring to a CAG report on the style of government accounting, he said: “The CAG, over and above these allegations, pointed to how the government is unable to explain how money in the divisible pool is much less than what it ought to be. It is bizarre we allow such thuggish mafia-style accounting in a democracy.”

“That a former official had stated there was in fact a desire to do these things and these did not happen by themselves is an important additional piece of information. We live in strange times,” he added.

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‘Hope they wake up’

Meanwhile, Karnataka Chief Minister Siddaramaiah expressed shock over the media report and said that it pointed towards a “systematic strain on state finances and autonomy”.

“In a shocking revelation, BVR Subramanyam, CEO of NITI Aayog, has exposed the Narendra Modi government’s hidden agenda in manipulating the financial autonomy of Indian states. An article from Al Jazeera reveals the deep-seated issues plaguing the federal structure under the current administration, pointing towards a systematic strain on state finances and autonomy,” the chief minister said in a press release.

“We had always been raising this injustice but blind MPs of BJP were truly blind. Hope they wake up at the earliest.”

“The implications of these actions are far-reaching, particularly for states like Karnataka, which have long voiced their struggles against such injustices. The Modi government’s attempt to lower the states’ tax share from 42 percent to 32 percent and its subsequent concealment of this failed attempt in Parliament, where Modi spoke of empowering states, only adds to the narrative of duplicity,” he added.

Read the full report by Shreegireesh Jalihal and Nitin Sethi, originally published in Al Jazeera here.