Union Finance Minister Rebuts Allegations of Tax Revenue Withholding, Highlights Increase in State Shares

In response to criticism from southern states, including Kerala and Tamil Nadu, regarding alleged withholding of tax revenue, Union Finance Minister Nirmala Sitharaman emphasized a significant increase in states’ share of central taxes and grants during the tenure of the Narendra Modi-led NDA government. Sitharaman assured members of the Rajya Sabha that tax devolution from the central pool to the states is strictly based on the recommendations of the Finance Commission.

Sitharaman highlighted data illustrating the substantial rise in funds transferred to states during the NDA regime compared to the preceding UPA tenure. She cited figures indicating a 224% increase in tax revenue devolution to Kerala and a 192% increase to Tamil Nadu during the NDA government’s tenure. Additionally, grants and aid from the Union government to Kerala surged by 458%, while Tamil Nadu witnessed a nearly fourfold increase during the same period.

The Finance Minister underscored that payments to states are made in a timely manner, with no tax revenue amounts held back, citing specific examples related to Kerala and Tamil Nadu. She also outlined various financial assistance measures provided by the Union government, including interest-free loans and additional borrowing, aimed at facilitating economic recovery and infrastructure development.

Sitharaman informed the House about the passage of the Finance Bill, 2024, the interim budget, and other appropriation bills, marking the conclusion of the budget process in Parliament. She reiterated the Modi government’s focus on capital expenditure to sustain higher GDP growth, with a substantial capital expenditure plan outlined for the fiscal year 2024-25. Furthermore, Sitharaman assured that budget allocations for key sectors, including welfare programs and social sectors, have not been reduced.

The discussion in the Rajya Sabha encompassed various aspects of the Union interim budget for the fiscal year 2024-25, the Union finance Bill for FY25, and supplementary demands for grants for the fiscal year 2023-24. Additionally, deliberations took place on Jammu & Kashmir’s interim budget for the partial year of FY25 and its supplementary demands for grants pertaining to FY24.