Investigative report exposes PM Modi bid to slash state funds, says CM

NT Correspondent

Bengaluru: Chief Minister Siddaramaiah on Thursday came down heavily on the Union government for 'shortchanging' states on tax revenue.

The CM posted his comments on 'X' handle while referring to a joint probe by news website Al Jazeera and Reporter’s Collective (RC), a non-profit journalism outfit.

The story quoted the CEO of NITI Aayog BVR Subrahmanyam who made the revelations last year at a seminar by the think-tank Centre for Social and Economic Progress (CSEP).

There was a CSEP YouTube stream covering the talk, which garnered about 500 views.

However, when RC cited the video in its query to the Prime Minister’s Office (PMO), public access to the video was cut off.

Subrahmanyam said that he had been the Centre’s liaison to the Finance Commission, an autonomous, constitutional body which decides the states’ share in taxes.

The purpose was to bring down the states’ share in taxes in the lead up to Prime Minister Narendra Modi’s maiden Union Budget in 2014.

However, the commission chairman YV Reddy rebuffed him, forcing the Centre to redo the Budget in two days, slashing welfare spending instead.

For instance, the allocation for the Union Ministry of Women and Child Development was halved. In 2013, then Gujarat CM Modi had campaigned for a 50 per cent share in taxes for states.

In the same year, the 14th Finance Commission had recommended 42 per cent share for states, up from 32 per cent.

Modi as PM however, wanted to restrict the share of states to 33 per cent in backdoor negotiations with the Finance Commission.

“In a shocking revelation, BVR Subrahmanyam, CEO of NITI Aayog, has exposed the Narendra Modi government's hidden agenda in manipulating the financial autonomy of Indian states. An article from Al Jazeera reveals the deep-seated issues plaguing the federal structure under the current administration, pointing towards a systematic strain on state finances and autonomy. We had always been raising this injustice but blind MPs of BJP were truly blind. Hope they wake up at the earliest,” Siddaramaiah said.

Cesses, surcharges climbing

The other issue raised was a sharp increase in cesses and surcharges, taxes in which states have no share.

These taxes went from 10.4 per cent of total taxes in 2011-12 under a Congress-led Centre to 20.48 per cent in 2021-22, as per the 15th Finance Commission.

The Modi regime also indulged in “off-Budget borrowings” from state-owned companies, an accounting trick of sorts, which keeps the fiscal deficit (difference between revenue and expenditure) from showing to maintain investor confidence.

J&K ‘fake UC’ raised eyebrows

Subrahmanyam accused the Centre of issuing “fake UCs”, referring to Utilization certificates, a document used to certify that funds had been used for the purpose they had been released.

The Centre allegedly did so for an infrastructure project when it ruled Jammu and Kashmir directly.