Even after the interim budget was approved, the central government is still the target of discrimination allegations. Along with Congress Party MPs and MLAs, Karnataka Chief Minister Siddaramaiah adopted a stance against the Center. He called on the Center to desist from discriminating while on a protest at Jantar Mantar, emphasizing that the state pays Rs.100 but only receives Rs.12 in return.
Several South Indian states,
including Karnataka, have raised charges against the center, claiming that those who pay higher taxes to the federal government receive disproportionately less money than other states. These states argue that despite their lower tax contributions, the national government gives greater funding to North Indian states. The budget’s revenue distribution specifics, including the shares of the Center’s taxes and duties assigned to each state, have been made public by the Central Government.
The highest beneficiary, Uttar Pradesh (UP), took home the most portion—17.939 percent, or Rs 2.19 lakh crore. Bihar obtained the second-highest share, worth Rs 1.23 lakh crore, at 10.058 percent, behind Uttar Pradesh. Third place went to Madhya Pradesh (MP), with 7.85 percent (95,752 crore), closely followed by West Bengal at 7.52 percent (91,764 crore). Maharashtra, with 6.31 percent (77,053 crore) received, completed the top five.
These states receive a smaller portion of the Shares
Andhra Pradesh is the state that receives the least amount of funding from the central fund—4.05 percent, or Rs 49,364 crore—of all the states. Karnataka comes in second with 3.65 percent, or Rs 44,485 crore, and Tamil Nadu comes in third with 4.08 percent, or Rs 49,755 crore.
What’s the point of contention?
The state governments in the South contend that their states are not receiving enough funding from the federal government. Congress also claims that these states’ share of cash is disproportionately smaller than their tax contributions. Karnataka was supposed to get 4.71 percent of the taxes distributed by the 14th Finance Commission. Nevertheless, this allotment dropped to 3.64 percent in the 15th Finance Commission. That is expected to cost the state over Rs 2 lakh crore. Based on the data, it is evident that states with higher tax contributions receive a lesser portion of the Center’s earnings. For example, Bihar obtains the second-highest revenue share behind UP, while not being substantially ahead in tax payments. On the other hand, even though they are among the states that collect the highest taxes, states like Gujarat, Tamil Nadu, and Karnataka receive significantly less money.
This is the distribution Plan of taxes.
Article 280 of the nation’s Constitution states that the Finance Commission is in charge of allocating tax shares. The Finance Commission’s job is to suggest how the states should be assigned shares. Many taxes that were formerly collected by state governments are now within the authority of the Center following the establishment of the Goods and Services Tax (GST). States are therefore forced to rely on the Center to get their fair portion of these monies. Notably, states are awarded these monies based on a weighted method that takes into account many aspects like population, income, performance, forest cover, and state deficit reduction initiatives.
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