New Delhi: Regional parties such as the DMK and the Shiv Sena faction headed by Uddhav Thackeray on Wednesday termed the budget disappointing and accused the Centre of taking away states’ resources and shortchanging them in their allocation, a view also shared by the Left.
DMK leader and former Union minister Dayanidhi Maran alleged “the Centre is trying to take all the money and giving nothing to the states.”
BJD leader Amar Patnaik said decreased allocation to states as a part of GDP will result in them looking for resources, that may include borrowing, to fund their primary health, education, and other sectors.
He, however, praised a few aspects of the budget, saying it has charted a very clear green growth path for the country and made the energy transition clear. He also spoke favourably of the budget’s tax provisions.
Rajya Sabha member Priyanka Chaturvedi, who represents the Uddhav Thackeray-led faction of Shiv Sena, too accused the Modi government of not making adequate allocations in the budget towards education and health infrastructure in states.
Union Finance Minister Nirmala Sitharaman gave Maharashtra the cold shoulder in favour of other states such as Karnataka and Gujarat, she said, adding, “We were expecting some announcements for Maharashtra, which is not just a state but the spinal cord of the national economy. Mumbai is the growth engine of the economy. There are no allocations for Mumbai.”
She said the Centre even discriminates while making GST reimbursements to the states.
CPI(M) general secretary Sitaram Yechury said the relations between the Centre and states are going to get further strained and fiscal federalism is now under “severe attack”. The GST compensation to states was given in terms of loans being facilitated for the states to raise, he said, accusing the government of putting new conditions on the loans.
“States cannot raise resources after GST. They are not allowed to borrow under the new conditionalities. So you have reduced the states to coming to the Centre with a begging bowl.
“Then you have what has been announced for Karnataka now, a huge allocation for them. It is very clear where there is BJP, state governments get benefits and non-BJP government states get squeezed. Thus, this will lead to a great strain in our polity,” Yechury said.
The leaders made these remarks in video interviews to PTI.
Slamming the budget, Maran said, “A lot of expectation was there that it will relieve the stress and tax on petroleum products but the government did not not announce it. They announced a lot of schemes for states but what they are asking is that they take care of themselves.”
He added: “We are worried now that they are trying to indirectly come towards the Electricity Act and trying to charge states more for electricity. Now they are trying to make sure that municipal tax is increased, so it is going to be a lot of burden on the common man.
“They are doing this in the name of discipline. if the states do this, they get this, if they don’t, then they are not eligible for funds. Rs 1 lakh crore for 33 states is peanuts. If you look at it, the Centre is trying to take all the money and give nothing to the states.”
The most important thing is, Patnaik said, that social sector spending on health, education, and rural development was not mentioned in the budget speech.
“If you look at the fine lines, one finds the increase is very nominal. As a percentage of GDP these increases really don’t count, as people, especially in rural areas, are negotiating the post-pandemic pangs even now. So the issues concerning rural development, education, and health should have been addressed more aggressively,” Patnaik said.
Allocation from the divisible pool to the states has been on a decline ever since the cess and surcharge was increased by the central government … and it has increased 10 times in the last eight years, the Odisha leader said.
“If enough allocation is not made through central schemes in these sectors, states will find it difficult particularly those like Odisha where there is not much base to increase tax revenue further. Ultimate reliance will have to be on borrowing which we don’t want to do.
“States are getting interest-free loans for capital expenditure but a lot of capital expenditure was already happening. It will help in doing more but the point here is for rural people of Odisha, increase in tele-density and new mobile towers are to be made. Rural roads need to be completed. Increase in MGNREGA expenditure… These have not been addressed,” he said.
