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BJP’s allegation against Raghuram Rajan is ‘unfounded’, ‘misleading’: Siddaramaiah

Karnataka Chief Minister Siddaramaiah on Monday said BJP’s allegation that the committee headed by former RBI Governor Raghuram Rajan has influenced the reduction in Karnataka's tax share is ‘unfounded’ and ‘misleading’.

Bengaluru, Feb 12,2024:  Karnataka Chief Minister Siddaramaiah on Monday said BJP’s allegation that the committee headed by former RBI Governor Raghuram Rajan has influenced the reduction in Karnataka’s tax share is ‘unfounded’ and ‘misleading’.

“The narrative suggesting that the committee headed by Raghuram Rajan recommended a reduction in Karnataka’s share of tax revenue is not only inaccurate but also a misinterpretation of the committee’s role,” the Chief Minister said.

He said that it is unfortunate how people in responsible positions peddle fake narratives to push their agenda.

“It is important to set the record straight with facts and evidence. It is in the DNA of BJP to spread fake news,” the Chief Minister said.

He said that it is crucial to understand the mandate of the Committee for Evolving a Composite Development Index of States, headed by Raghuram Rajan.

“Contrary to the claims made, the committee’s primary objective was not to recommend changes in the states’ share of tax revenue,” the Chief Minister said.

He said that the committee’s purpose is to identify backward states based on various criteria, thereby helping in the equitable allocation of development funds to address regional disparities.

“The committee’s focus is to ensure a balanced distribution of certain development funds to enhance the overall growth and progress of all states, particularly those lagging in specific development parameters,” he said.

He said that the recommendations made by the committee were explicitly intended to guide the allocation of certain development funds from the Centre to the states.

“These recommendations were not meant to replace existing methodologies for devolution of taxes allocation,” the Chief Minister said.

He said that the committee’s report clearly states that its framework should be used alongside other existing methodologies, including that of Finance Commission’s recommendations for share of tax devolution, for a holistic and fair allocation of resources.

“It is also important to note that the Finance Commission, which is constitutionally mandated to determine the distribution of tax revenues between the Centre and the states, operates independently of the committee mentioned above,” the Chief Minister said.

He said that subsequently 14th Finance Commission report (submitted on 15 December, 2014), which came after the committee’s recommendations (submitted in September 2013), proposed an increase in the devolution of taxes to Karnataka, from 4.328 per cent in the 13th Finance Commission to 4.713 per cent in the 14th Finance Commission.

“This increase clearly contradicts the allegations that the committee’s report led to a reduction in Karnataka’s tax share,” the Chief Minister said.

He said that Karnataka’s tax share was actually reduced by the 15th Finance Commission which was constituted by the Narendra Modi government and whose report was submitted in November 2019.

“Was the 15th Finance Commission constituted in 2019 by PM Narendra Modi influenced by some committee which gave a report in September 2013?” the Chief Minister asked.

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