As the Karnataka State Government received Rs. 1,678 crores from the Centre as the first installment from the tax-devolution pool, which is good news for the lakhs of state government pensioners and employees. It is assumed that the Karnataka government is likely to pay salaries and pension on schedule.
The coffers of the BJP state government have dried up due to the ongoing lockdown. The state government also had decided to defer a part salary of the government employees for the next three months or opting for an overdraft facility to pay its employees so that they are able to tide over the crisis in the near term.
Even though the handout from the Centre was delayed, but it has eased the financial situation of Karnataka, even though the relief is temporary.
As per the 15th Finance Commission recommendations, the Karnataka state government is entitled to a devolution fund of Rs. 31,180 crores from the central tax-pool for 2020-21 financial years. As on date, the Centre owes Rs. 8.55 lakh crores to all state’s government. The Uttar Pradesh received Rs. 8,255 crores, and Bihar received Rs. 4,631 crores, which was more than the Karnataka state government received. The installment was received from Rs. 46,038 crores were released by the Centre in the first tranche.
It is also believed that the Centre is going to give a special grant of Rs. 5,495 crores to the Karnataka State Government. The special grant has been granted by Finance Commission since Karnataka’s share in the central pool has Rs.36,675 crores in 2019-20 financial year to Rs. 31,180 crores in the financial year 2020-21.
The recommendation of the additional grant was initially rejected by the Union Finance minister Nirmala Sitharamanm. But after Chief Minister BS Yediyurappa presented the dire financial situation of Karnataka to the union minister, she did a turnaround.
BT Manohar, who is a member of the Karnataka government’s advisory council for GST, is hoping that the Centre will release the pending Rs. 4,500 crores under GST compensation quickly to the state.