The Karnataka government and the Union government clashed yet again over revenue sharing. The latest confrontation on Saturday, April 6 turned out to be an interesting one thanks to an open debate organised by a civil society group. While Karnataka Revenue Minister Krishna Byre Gowda accepted the invite to the debate, Union Finance Minister Nirmala Sitharaman did not respond. Instead, she held a press conference in Bengaluru hours before the event. Karnataka Chief Minister Siddaramaiah, meanwhile, challenged her on social media.
While Nirmala Sitharaman acknowledged that there had been an “unintentional delay” in releasing drought relief to the state, she claimed that it was because the Union government had to seek prior permission from the Election Commission.
By Saturday evening, Nirmala, Gowda, and Siddaramaiah had rattled off enough figures and traded enough barbs to leave anyone’s head spinning. During the public debate, Gowda often addressed the empty chair meant for the Union Minister.
Read: Nirmala Sitharaman dodges open debate with Karnataka Revenue Minister
Drought relief standoff
Drought relief is a major bone of contention between the state and the Union government. The debate aggravated after Union Home Minister Amit Shah stated that the state government had delayed the request for drought relief.
Read: ‘Union govt violating states fundamental rights’: Karnataka in SC over drought relief
Explaining the “unintentional delay”, Nirmala said that the Karnataka government submitted a memorandum in October 2023. The Inter Ministerial Central Team then conducted an assessment and sent it to the Agriculture Ministry in November. The Agriculture Ministry submitted its report to the Sub-Committee of the National Executive Committee and placed it before the High-Level Committee. “But on March 28, 2024, a letter has been sent to the ECI to get approval in context of the Model Code of Conduct (MCC) for convening the HLC meeting and we’re awaiting the approval,” she said.
NDRF or SDRF?
Nirmala pointed out that the Union government had released funds allocated to Karnataka under the State Disaster Relief Fund (SDRF). “I agree that in such matters the delay is completely avoidable, but the state governments have to provide the relief immediately under the State Disaster Relief Fund (SDRF),” she said.
She said that Rs 697 crore out of the Rs 928 crore had been released in two instalments of Rs 348 crore to the state well in advance under SDRF. “I am not harping on to cover for the delay in NDRF, but the Union government did not wait for the disaster to happen to release funds under SDRF,” she said.
Siddaramaiah responded to her claims, again maintaining that it was the state’s right to receive funds from the Finance Commission (FC). “It’s important to understand that this (SDRF) fund is something states are entitled to based on the Finance Commission’s recommendation, it is not a favour,” he said.
The CM also said that the state government had been judicious in using these funds. “Yet, with drought-induced damages escalating beyond Rs 37,000 crore, our plea for additional support of Rs 18,171 crore from the National Disaster Response Fund (NDRF) seems to be falling on deaf ears. The Finance Minister is perhaps deliberately confusing the two distinct funds,” he said.
He went on to talk about the nature of the two funds. “Funds under SDRF are allocated every year and this is shared between the Union government and state in the ratio of 75:25. This fund is the state’s right and its quantum is determined by the Finance Commission. SDRF is used for routine disaster relief. When the scale of the disaster is large, a memorandum is submitted to the Union government for funds under NDRF. Drought in Karnataka is unprecedented… The money available under SDRF is not sufficient to provide for crop failure of over 48 lakh hectares belonging to 34 lakh farmers. For providing relief for crop loss as per the norms we need Rs 4,663 crore. This money is the farmer's right.”
Finance Commission grants
When journalists asked Nirmala about the Karnataka government’s claims about the FC grants, the Union Minister repeated that the “final” report does not mention such a grant. “There were some recommendations in the interim report that the Congress is repeatedly asking for on public forums. But there is no such recommendation in the final report,” she said.
Minister Gowda said that the 15th FC had recommended in its 2020-2021 report that no state should face revenue loss due to its suggestions. He highlighted that Karnataka was one such state and the FC recommended a special grant of Rs 5,495 crore from the Union government to cover this shortfall.
“The Finance Minister is misleading the people by referring to the 2020-21 report as an interim report. The Union government has not given Karnataka the special grant which is due,” he said.
Gowda presented documents revealing that the 15th FC had recommended an additional special grant of over Rs 6,000 crore for Karnataka in its 2021-2026 report, which the Finance Minister referred to as the final report. “The Union government had asked the FC to withdraw its recommendation for the special grant, but the Finance Minister claims all recommendations in this report have been adhered to,” Gowda alleged.
Siddaramaiah on the other hand noted that the 15th FC issued two reports, one for the year 2020-21 and another for the years 2021-26, without making a distinction between ‘preliminary’ and ‘final’ recommendations. “Her (Nirmala Sitharaman) claims starkly misrepresent the Finance Commission’s stance,” he said.
Read our previous story on this to find out what the Finance Commission actually said
Capital loans
Nirmala criticised Siddaramaiah and others for repeatedly bringing up the FC grants and drought relief funds and said that they should mention the Rs 8,035 crore that the Union government had given the state as capital loans, interest-free for 50 years.
To this, Siddaramaiah retorted, “Why should Karnataka resort to loans when it is entitled to these funds as per the (Finance) Commission’s reports?