Karnataka yet to get nearly Rs 8k cr from Centre under devolution

With the financial year nearing closure, Karnataka is facing a deficit of Rs 7,850.29 crore in its share of the divisible pool of central taxes, according to data tabled by Chief Minister Basavaraj Bommai in the Assembly.

But, it’s not all bad news as the government’s own tax and non-tax revenue inflows look healthy. Under devolution, Karnataka is supposed to get Rs 24,273.06 crore from the Centre in the current fiscal as per budget estimates.

At the end of December, the state had received Rs 16,422.77 crore, according to Bommai, who is also the finance minister. The state is facing a bigger deficit under grants-in-aid by the Centre.

Karnataka is to get Rs 28,254.76 crore under various programmes. By December, the state got Rs 19,737.88 — a shortfall of Rs 8,507.88 crore, data shows.

Bommai will be tracking these numbers closely as he prepares for his maiden budget early next month.

In the previous 2020-21 fiscal, Karnataka’s share in central taxes was Rs 28,591.23 crore, but it received Rs 21,694.11 crore, according to Bommai’s data. This was a reduction of Rs 6,897.12 crore, which had an impact on the state’s finances that was hit hard by Covid-19. Bommai has reported a shortfall in GST compensation too.

The government’s estimate is that it will get a compensation of Rs 12,708 crore. By December, it received Rs 5,447.97 crore.

While the 14th Finance Commission had fixed 4.71 per cent as Karnataka’s share in the divisible pool of central taxes, the 15th Finance Commission reduced the share to 3.64 per cent.

Last year, Karnataka faced a devolution shortfall of Rs 6,897.12 crore. According to Madhusudhan B V Rao, senior research advisor at the Centre for Budget and Policy Studies, the state is likely to get more under devolution, given the GST collection trend.

“This will mean that it can only increase and there can’t be a shortfall,” he said.

What will also make Bommai feel better are the state’s revenue receipts. According to provisional figures, the state’s revenue receipts touched 86 per cent of the budget estimates in January. Revenue inflows increased by almost Rs 19,000 crore from December. At this rate, an increase of another Rs 40,000 crore is expected by the end of the fiscal, Rao said.

“CM Bommai may find himself in a comfortable position with the government having borrowed only 59 per cent of the public debt estimated in the budget till December-end,” Rao said. “Fiscal deficit is within the limit and he may go for a slightly expansionary budget,” he said.

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