Mysuru: Karnataka Chief Minister Siddaramaiah on Friday launched a sharp attack on the Central government, claiming that the recent decision to simplify and reduce Goods and Services Tax (GST) rates would cause an annual revenue loss of around ₹15,000 crore to the state. He alleged that the move was politically motivated, made with an eye on upcoming elections in Bihar.
CM blames Centre for politically motivated GST cuts
Speaking to reporters in Mysuru, Siddaramaiah said, “The GST rate revision has nothing to do with fiscal prudence. It is a politically driven move meant to influence voters in Bihar.”
He added that while the Centre was showcasing the GST cuts as a reformist step, it was the states that would bear the financial brunt. “We will incur a ₹15,000 crore loss annually. We can neither oppose the move nor reject it. The Centre is celebrating this as if it’s an achievement — will it refund the excess tax it collected over the past eight years?” the Chief Minister asked.
Siddaramaiah criticised the BJP-led NDA government for revising GST rates eight years after its introduction in 2017. “They call it rationalisation, but the states are left struggling. This is fiscal injustice,” he said.
Karnataka’s complaint on unfair central fund distribution
The Chief Minister also accused the Union government of bias in allocation of central funds, alleging that Uttar Pradesh receives nearly 18% of grants, while Karnataka gets just 3.5% despite being one of the top tax contributors in the country.
“Karnataka contributes ₹4.5 lakh crore in taxes to the central pool every year but receives only 14% in return,” Siddaramaiah said. “I am not saying the state should withhold taxes, but the Centre must distribute funds in a fair and justified manner.”
He further alleged that the Centre had denied multiple grants recommended by the 15th Finance Commission, including:
- ₹4,590 crore for general development projects
- ₹3,000 crore for lake rejuvenation
- ₹3,000 crore for Bengaluru’s Peripheral Ring Road project
- ₹5,400 crore for the Upper Bhadra irrigation scheme
Calling the denial “intentional”, Siddaramaiah said Karnataka was due to receive a total of ₹11,490 crore, along with an additional ₹5,000 crore that has not been released.
“Will go to court if necessary”
When asked if the state government planned to take legal action against the Centre, the Chief Minister replied, “If needed, we will approach the courts to secure Karnataka’s rightful share. We will not hesitate.”
Siddaramaiah reiterated that his government would continue to pursue fiscal justice through constitutional and legal channels.
Progress on Karnataka’s caste survey
The Chief Minister also reviewed the progress of the ongoing caste-based socio-economic survey, which he said would likely be completed by October 7. Out of an estimated 3 crore households, around 80 lakh have already been surveyed, while 1.8 crore families remain to be covered.
Siddaramaiah clarified that the purpose of the survey is not to divide society but to gather factual data for policymaking. “This is a socio-economic and educational survey meant to understand the living conditions of people,” he said. “There is no question of dividing people along caste lines, as participation is voluntary. The BJP is spreading misinformation for political purposes.”
Fiscal and political implications
Political analysts say Siddaramaiah’s comments highlight growing Centre–State tensions over fiscal autonomy and fund distribution. Karnataka has consistently demanded greater financial devolution, arguing that the current system disproportionately benefits larger states.
With the GST rationalisation expected to reduce tax inflows, the state could face challenges in funding welfare and infrastructure projects. Siddaramaiah’s indication of possible legal action underscores the seriousness of Karnataka’s concerns.
Conclusion
The Chief Minister’s strong remarks signal an escalating confrontation between Karnataka and the Centre over fiscal federalism. As the state braces for a potential ₹15,000 crore shortfall, the government’s next steps — including possible legal recourse — could set an important precedent for other states facing similar grievances.