Tax devolution: Karnataka to get Rs 37,000 crore in 2023-24

This is nearly Rs 5,000 crore more than what Karnataka will get in the financial year ending March
Last Updated 01 February 2023, 21:03 IST

Chief Minister Basavaraj Bommai, whose 2023-24 budget is likely to be a populist outreach keeping the upcoming Assembly election in mind, will have an eye on Rs 37,252 crore that Karnataka is supposed to receive under devolution.

This is nearly Rs 5,000 crore more than what Karnataka will get in the financial year ending March.

Finance Minister Nirmala Sitharaman has estimated that Rs 1.02 lakh crore will be given to states under devolution of taxes. As fixed by the 15th Finance Commission, Karnataka is entitled to a 3.647 per cent share in devolution from the union tax pool. Based on this, Karnataka is estimated to get Rs 37,252 crore.

In 2022-23, the union government had estimated that Karnataka would get Rs 29,783 crore. In the revised estimates, Karnataka will get Rs 34,596 crore this fiscal, according to Union Budget documents. “This might go up further if tax collections improve in February and March,” Madhusudhan B V Rao from the Centre for Budget and Policy Studies told DH.

The increase in the devolution amount could come in handy for Bommai, the finance minister who is working out an election budget. But it remains to be seen how Bommai will make fiscal space to manoeuvre in the face of huge committed expenditure, including debt servicing.

For the fiscal ending March 2022, committed expenditure touched nearly 90 per cent of the state’s revenue receipts. This means 90 per cent of the money earned by the government went towards salaries, pensions, subsidies and so on.

Also, Karnataka’s debts are rising. The state’s total liabilities are estimated to be Rs 5.91 lakh crore in the 2023-24 financial year. In the 2022-23 Budget, Bommai said the government would borrow Rs 72,000 crore.

He has also set aside Rs 41,572.24 crore for debt servicing - Rs 12,632.70 crore for principal and Rs 28,939.54 crore for interest payments.

Leader of the Opposition Siddaramaiah slammed the Union Budget for “cheating” Karnataka, which he said is a state that collects about Rs 3.5 lakh crore in GST, income tax, corporate tax, cess and surcharges.

Siddaramaiah pointed out that the 15th Finance Commission had recommended a special grant of Rs 5,495 crore to Karnataka for 2020-21 to offset the decline in devolution and revenue deficit grants when compared with 2019-20.

“The 25 BJP MPs from the state should have gone to Prime Minister Narendra Modi and ensured that the money came to the state,” he said.

(Published 01 February 2023, 16:56 IST)

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