Daijiworld Media Network - Bengaluru (SP)

Bengaluru, Feb 5: The union government has dashed the hopes of the state government by trashing a recommendation made by the 15th finance commission to release a special grant of Rs 5,495 crore to Karnataka during the next financial year.

Compared to the current fiscal, the share of the state in the central taxes for 2020-21 will be lesser by Rs 5,495 crore. The commission had recommended making good this shortfall by way of special grant. The centre, which does not agree with this view, has asked the commission to review this recommendation. The state government is now making preparations to submit a proposal to the central government to release Rs 5,495 crore special grants as per the above recommendation, and also to increase the state's share in central taxes.

As soon as the period of the 14th finance commission's recommendation expired, the 15th finance commission had sent recommendations for the year 2020 - 21. During the period of the 14th commission, the share of the state in the central taxes had been pegged at 42 percent. Now, because of formation of Jammu and Kashmir union territory and Ladakh, the share of states has been further pruned to 41 percent with a one percent cut.

Out of the above, Karnataka was set to get 3.65 percent of the central tax collection. This amount had been fixed at Rs 39,806 crore during the last term of the 14th finance commission. As the centre has scaled down its share for the next year to Rs 36,675 crore, there will be a shortfall of Rs 3,131 crore, sources pointed out. The 15th finance commission had recommended making good the shortfall by way of special grant but the union government has outright rejected this recommendation.

The state government, it is learnt, now plans to urge the centre to agree to the 15th finance commission recommendation and sanction special grant of Rs 5,495 crore to Karnataka for 2020-21. It also wants to seek additional grants as the share of the state in central taxes has further been brought down. The government also plans to request the 15th finance commission to take steps to change the yardstick used for fixing shares of state in central taxes between 2021 and 2025.