BackWe are not against GST: K. Siddaramaiah
Karnataka CM K. Siddaramaiah talks about the steps taken by the government to encourage more investments in the state and to tackle drought
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Karnataka chief minister K. Siddaramaiah is nearly midway through his term of leading the Congress state government, whose key priorities are social security, especially those of labour, farmers and children, as well as employment generation for the youth.
In an interview with Mint, he talks about the steps taken by the government to encourage more investments in the state and to tackle drought.
He shares his experience of being chief minister of a Congress-ruled state at a time when the Bharatiya Janata Party (BJP)-led National Democratic Alliance (NDA) government is in power at the centre.
Edited excerpts:
The Department of Industrial Policy and Promotion’s (DIPP’s) report has singled out Karnataka as a reform example. They have presented you as a case study for transformation of the commercial tax regime, and as a role model.
Yes, of course. As far as the commercial tax regime is concerned, we were the first state that introduced VAT (value-added tax) in the country. After the decision was taken by the government of India at a national level, Karnataka was the first state to introduce VAT in 2004-05.
Till then, no state had introduced VAT. As a matter of fact, Gujarat and Tamil Nadu were opposed to it. Even now, we are for GST (goods and services tax). We have some reservations but, otherwise, we are for GST.
Otherwise, as it is, this law was drafted by the previous UPA (United Progressive Alliance) government. We are not against GST. The only thing is we have some reservations and those things will have to be addressed by the government of India.
Are these reservations the ones that have been flagged by your party in the standing committee or are these at the state level?
This is at the level of the state. Because we are levying entry tax in lieu of octroi tax. Earlier, there was octroi tax. And we are transferring these (proceeds) totally to the local bodies. Local bodies will face financial problems. Either we must be allowed to carry on (with) this entry tax or they have to give compensation with this, additional compensation over and above (what has been promised).
The Congress government in Karnataka is midway through its term. What do you think have been your key achievements?
We have implemented so many programmes, in the social sector particularly; we are giving 5kg (of rice) per head (to the poor) and there is no upper limit for the families, and it is free. There is one programme which we introduced immediately after coming to power and we are implementing it—we are giving milk to schoolgoing children—anganwadi children and schoolgoing children from first standard to the 10th standard—three days in a week, 150ml per child.
We have waived off all the loans due from the poorer sections of society, those who have taken loan from development corporations such as SC/ST (Scheduled Castes and Scheduled Tribes) development corporation, labour development corporation. All the loans have been waived off. After we came to power, we have cleared about ₹ 1,20,000 crore ( ₹ 1.2 trillion) worth of proposals of investments. They will bring about 240,000 jobs in the state. That is also one of the achievements we have made and work is going on.
We are spending every year ₹ 10,000 crore for irrigation purposes. This is one of the promises we made to the people of Karnataka during our assembly election campaign. A lot of railway projects are coming up.
The UPA amended the Constitution for Article 371 and inserted a clause (j) giving special status to Hyderabad-Karnataka region. Every year, we are spending more than ₹ 1,000 crore for the development of the Hyderabad-Karnataka region. This is a longstanding demand—for 30-35 years. The people of that area are demanding this. So, immediately after we came to power, we requested the UPA government and they amended the Constitution.
We have given statutory status to the special component plan, which is for Scheduled Caste people and tribal people for whom we have the Tribal Sub Plan (TSP). Earlier, in 2012-13, the amount earmarked for SCP (special component plan for the integrated development of Scheduled Castes) and TSP was 8,600 crore. After this special legislation was passed, now this year, we have earmarked ₹ 16,232 crore—it almost became double and the entire money goes to Scheduled Castes and Scheduled Tribes people only. It is non-lapsable. Suppose this money is not spent in this current (fiscal) year, it will be carried over next year. So, this is a very, very progressive legislation that we have got. Andhra Pradesh, of course, is the first state which passed this type of legislation and Karnataka is the second.
You have maintained Karnataka is the favourite destination for investors. How does the state plan to bring in more investment and simplify the process of setting up businesses?
As I have already mentioned, investment is already coming to Karnataka. We have cleared proposals worth ₹ 1.2 trillion in the last two years. We have brought out a new industrial policy in which we are trying to bring investment to the tune of ₹ 5,00,000 crore, creating 15 lakh (1.5 million) jobs. We are going to hold an investors’ meet soon which was supposed to happen in November but now we have postponed it by two-three months owing to drought.
The drought you mentioned—there is rural distress across the country. Some states are affected more, some less. Some states have already declared drought in parts.
Out of 176 talukas, we have declared 136 talukas as drought-affected. That is very serious. After 40 years, we are witnessing this kind of drought. For the first time, all our reservoirs are at 50% capacity—that is why there is a problem of power, water, fodder, and that is why we are effectively addressing all these problems.
We have requested the government of India to release ₹ 3,800 crore to address the issue. But the total loss the state has incurred is about ₹ 15,600 crore. This year, we are facing a severe drought—30 lakh hectares of land has been affected.
Has the centre responded?
It has sent a central team. They have visited about 16 districts and they have met officials and people here to assess the severity of the drought. I hope they are convinced about the situation.
The central government has talked about increasing the number of NREGA (national rural employment guarantee Act) work days. They have also talked about the rurban (rural-urban) areas.
This provision of increasing work days during drought has already been there. Just increasing the number of days will not help the states; they have to give more money to the states.
The new fiscal arrangement after the 14th Finance Commission, how do you see it? Are you critical or do you appreciate that the states would get more power to spend?
The government of India, both the prime minister and the finance minister, claim that they have given more money to the states after the Finance Commission (recommendations). But in reality, it is not so. If I give you the figures, by 14th Finance Commission, we are getting about ₹ 16,560 crore in 2014-15. After the implementation of the Finance Commission, we are getting ₹ 24,790 crore—it means we are getting ₹ 8,230 crore more, when compared with the last year.
But in centrally sponsored schemes, in 2014-15, we were getting ₹ 16,626 crore; this year we are getting only ₹ 8,146 crore. They have cut down the grants to centrally sponsored schemes drastically like mid-day meal scheme, ICDS (integrated child development services) scheme, drinking water schemes. The total impact is, we are losing ₹ 1,987 crore. For the ongoing centrally sponsored schemes, because of that, the burden on us would be ₹ 4,689 crore. That is the kind of money we have to spend from our exchequer.
Have you approached the central government on this issue, and what do they say?
Yes, we have conveyed this. They just say, “We will look into it".
Being a chief minister from an opposition party, how has your experience been with the change of regime at the centre? What is the single most important concern that you have with the NDA government?
One thing that I have already mentioned is the cut in grants; under the UPA government, this did not happen. No. 2, as far as the farmers’ problems are concerned, the NDA government is not doing enough. Because there are so many problems of the farmers. Now, farmers are committing suicide—not only in Karnataka but across all the states. The government of India should have come up with a big package to help the farmers and so far they have not done it.
So, in cooperative federalism, is there a gap in its practice?
It is not in practice, cooperative federalism is on paper.
Has mining activity in Karnataka resumed in full force after the Supreme Court lifted the ban? There are reports that many mines are still shut even after the ban has been lifted.
Twenty nine mines of A and B categories are working. As far as C category mines are concerned, 15 such mines, there is an evaluation going on and we are going to auction them.
The Supreme Court has given us (the permission to mine) 30 million tonnes (mt, of iron ore per year). Now we are producing 18-20 mt per year; but next year onwards, we will be touching 30 mt.
Internationally, commodity prices have collapsed because of China’s retreat from the market; so iron ore prices are really falling. Do you think it will impact your auction?
For domestic purposes, I do not think there would be any problem.
On the contentious issue of land acquisition, the centre’s stance is states can do it in whichever way they want. Firstly, is there a problem of land shortage in the state?
There is no problem as such because now we will follow the 2013 UPA Act and that is in force now. We are not going to make any changes to that.
How do you see the disruptions caused by the Congress party in Parliament?
As a prime minister of the country in a democratic set-up, you should have taken the opposition into confidence, but that has not happened. The prime minister (Narendra Modi) never attends Parliament; in the entire (monsoon) session, he attended it twice or thrice. The BJP does not believe in democracy in the strict sense.
For your remaining tenure, what is the vision that you have for Karnataka?
We had made 165 promises to the people in our manifesto in the last assembly election and we have fulfilled more than 100 of them. The remaining promises will be fulfilled in the remaining years.
Another thing is that we have to bring a change in Bengaluru city since it is a global city. We have to bring a visible change in Bengaluru so far as infrastructure and traffic are concerned, and that is a big task for us.
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