and let me go straight to Washington DC, where KB Subramanian, Executive Director IMF is joining us, Mr Subramani, and really appreciate your time. The Karnataka chief Minister says that formula to calculate the devolution of tax revenue to states was incorrectly altered by the 15th Finance Commission. What is the truth? Firstly, uh, Maria, as you mentioned, these are decisions that are taken by the Finance Commission. Um, the members of the Finance Commission, including its chairperson, visit every state, have consultations with every state, understand their needs and then, uh, decide the formula for the allocation. So that's the first point. Second point to, uh, to keep in mind is that, um when it comes to the overall expenditures, you know, if states decide to, uh, spend their money on, uh, freebies, then blaming the centre for, you know, having their Fisk not in order, I don't think is actually proper. And I think in the particular example that we are talking about, we all know very well why the Fisk has been, you know, has has gone into distress. Um, you know, in earlier, in the earlier government, there was no problem. You know, those five guarantees actually have. Not only have they put the fisc in in distress, they've also actually stopped capital expenditures. In fact, the deputy chief minister of Karnataka himself actually had mentioned that. So I think these are political posturing, the that the Finance Commission uses very, very, very clear. Um, II I And and I think that the last point that I would I would like to mention here is that the, uh the proportion of the state's revenues that come from grants from the centre, you know that are allocated by the Finance Commission is not the entire it's about, you know, around about anywhere between 15 to 20%. So there is still a large proportion. Um, you know, uh, of of revenues that state can get, you know, they actually have excise on petrol, diesel et cetera, on on alcohol. Um, and and so, you know, they do have the, uh, degrees of freedom to be able to actually generate revenues on their own. So, you know, as they say in that, you know, uh um, sometimes you need sort of a, you know, a fall guy to blame. And that's what seems to be the story to hear. Tell us, you know, because not just one state that is Karnataka. There are other states are also saying that the allocation is discriminatory and not transparent. And that is causing a lot of concerns among them. You know, there are protests that are happening by Tamil Nat Kerala Karnataka. So let me, you know, put out some statistics. Let's take two states that are not in the South. Um, let's take Gujarat. Um, you know, for every rupee that Gujarat contributes to, um, you know, to to the to the kitty, Uh, it gets 28 peso back in the, you know, from from the centre. You know, take take another state. Maharashtra, Um, again, Uh, you know of for every rupee that it contributes, it gets eight pesa back. This is data. You know, uh um uh, from from from various budget documents, et cetera. So, you know, uh, you can you you one can ask the question, you know? Is there basically discrimination there? No. This is part of the Finance Commission's, uh you know, uh, uh, process. And I know for a fact that the government has been central government has been adhering to the recommendations of the Finance Commission. The finance Commission, you know, decides on, you know, on all based on a formula where equity, you know, among states is a very important consideration as well. So, um, you know the states that you're talking about compared to those as I gave you the statistics, I think it is absolutely clear that there is basically, you know, uh uh, this is sort of a unnecessary issue that is being breaked up here. Um, I think when we know in A in a country like India, with the kind of diversity that we have there be differences in economic progress and in order to ensure that our social fabric remains, you know, remains solid. It is important to actually, you know, take other states along in states that are, you know, economically, a little bit more backward. We need, you know, bigger, bigger grants. For instance, if you look at states like Bihar Pradesh, actually who are, you know, are aren't doing as well. Actually they get, you know, a bigger proportion. You know, for every P that they contribute in terms of their the revenue, they actually get a higher share. That's because they're actually backward. And I think that is something which I, as an economist, leave the politics aside, would definitely support. OK, why is this narrative now being seen? Of course. A few months to go for the elections. That issue aside, uh, the fact is that the Finance Commission members are chosen by the centre, the government of the day. That is also something that the that the states allege that you know, they would be doing something. You know, the Finance Commission would be listening to what the centre wants. But, Maria, you know that aspect where this Finance Commission members are chosen by the centre has been true for every finance commission, not just, you know, the the the recent Finance Commission. And as for you know, why is this coming up? I think that is a That is a political question that, you know, I can speculate on to me. I think the main reason is that in the States that are actually crying, you know, who at this point in time are the states that have actually made, you know, promises on freebies that are completely and and and which is what is making that face really come under stress. And that is why they're actually trying hard. So I to me, basically, is a completely political, you know. Uh um uh uh uh, uh, you know, question. Um, this is not an economic question. I think in the past as well. If you look at, I'm sure there have been, You know, if you go and read history there, there must have been states that might have actually expressed this kind of concern. But I can tell you for a fact that, having been, you know, uh, uh, be close associate with this, there is no lack of transparency. There is no lack of process, Absolutely due process is followed. You know, whatever the recommendations of the finance Commission are is what is followed. And I gave you data of states that are, you know, which actually can can can, you know, sort of even compared to some of the states. I mean, I gave you data for gut I gave you State for as well, so I think you know, the data clearly suggest that this is just empty rhetoric. All right. Thank you so much for joining us and appreciate your time
