Finance Minister Hits Out at Congress Govt in Karnataka for High Inflation, Poor Law and Order

Bengaluru: Union Finance Minister Nirmala Sitharaman on Sunday said that high inflation and poor law and order in Karnataka are the contributions of the Congress government.

Responding to Karnataka Chief Minister Siddaramaiah’s statement that injustice was meted out to the state by the Centre, Sitharaman said the state’s economy worsened mainly due to the hike in prices of fuel, milk, and stamp duty as well as poor capital expenditure.

“The contribution of the state government is high inflation, much higher than the national average. And how I am saying that? Inflation between June 2023 and June 2024 the national average was 5.4 per cent. Karnataka is at 6.1 percent,” Sitharaman, who is a Rajya Sabha member from Karnataka, told reporters here.

Drawing a contrast between the BJP’s rule in the state and the present Congress dispensation, the Minister said between June 2022 and May 2023, Karnataka's inflation was lower than the national average. While the national average from June 2022 to May 2023 was six percent, Karnataka kept its inflation rate at 5.39 percent, Sitharaman pointed out.

Citing the reasons, the FM said petrol and diesel prices were hiked by Rs 3 and Rs 3.5 respectively. Milk prices have gone up by Rs 5, property guidance value has been increased from 25 percent to 30 percent, stamp duty charges have been increased by 200 percent to 500 percent, the vehicle registration fee has been hiked by three percent and additional lifetime tax on electrical vehicles have been imposed.

“The revenue deficit is very high, capital expenditure spending is not happening or even reduced with statements saying because I am doing this welfare, the five packages (guarantees), which I have promised, I can’t spend money on capital expenditure.

If you don’t spend money on capital expenditure, employment is not going to come to Karnataka. You won’t have your youth employed. Unless capital expenditure money is spent, your demand will not increase, consumption will not increase and youth employment will not happen,” she said.

According to Sitharaman, the open market borrowing in Karnataka has increased and has already touched over Rs one lakh crore. “There was a time when Karnataka was revenue surplus just two years ago, but now it’s revenue deficit. Industries are leaving, law and order is worsening and SC/ST funds are being siphoned off,” she alleged.

Dismissing Siddaramaiah’s allegation that Karnataka did not get its due share in the budget this year, Sitharaman said there was a lot of misinformation being spread about fund allocation. She termed as 'completely false' the state government's charge that the Centre did not give Karnataka its due.

According to her, the tax devolution between 2004 and 2014 when the Congress-led UPA government was in power at the Centre, Karnataka received only Rs 81,791 crore over ten years whereas between 2014 and 2024 under Prime Minister Narendra Modi, Karnataka received Rs 2,95,818 crore.

“So quickly if I have to compare, under the UPA per annum, you (Karnataka) had Rs 8,179 crore under tax devolution in 10 years, whereas PM Modi gave Rs 45,485 crore this year alone,” she noted.

Karnataka received Rs 60,779 crore as grant-in-aid in 10 years under the UPA, which means Rs 6,077.9 crore per annum. However, under the NDA rule in the last year, it’s Rs 2,36,955 crore. She also noted that post-COVID, beginning from 2020-21 to 2023-24 Karnataka received a total Rs 8,312 crore interest-free loan for 50 years.

While the allocation for Railways between 2009 and 2014 was Rs 835 crore for Karnataka, in 2024-25 budget Rs 7,559 crore was allocated for the department, the FM explained.

There are 31 ongoing projects pertaining to laying new railway lines worth Rs 47, 016 crore in Karnataka, Sitharaman said adding that since 2014, 638 railway flyovers have been built. Also, seven Vande Bharat trains are operationalised in the state.

Referring to the Smart City project, she said seven cities have been selected and Rs 6,428 crore have been given to Karnataka. She added that 904 projects worth Rs 15,000 work orders have been issued related to the project.

As many as 4,600 roads have been constructed already in Karnataka. The NDA government has already invested over Rs one lakh crore on highways-related projects in recent years. Many greenfield projects are being built under the Bharat Mala Project Phase-1, the FM said.