Chief minister Siddaramaiah on Wednesday led a protest in New Delhi against the alleged injustice meted out to Karnataka and other southern states in the devolution of taxes weeks after his West Bengal counterpart, Mamata Banerjee, held a similar demonstration in the Capital in December 2023.

Kerala chief minister Pinarayi Vijayan and his Cabinet colleagues were scheduled to stage a protest in Delhi against the Union government’s alleged negligence towards the state on Thursday.

Siddaramaiah dismissed the Bharatiya Janata Party (BJP)’s allegation that the protest was aimed at raking up the north-south divide. He added that the Congress wants the country to be united but there should be no discrimination against the southern states.

“We are raising the issue of discrimination meted out by the government of India to the state of Karnataka and other southern states,” Siddaramaiah said. He added he wrote to all BJP and the Janata Dal (Secular) members of Parliament and asked them to participate in this agitation.

He said the formula used to devolve taxes to the states, especially Karnataka, under the 14th Finance Commission was changed. He called for reverting to the old formula to stop the revenue loss of Karnataka.

Siddaramaiah’s deputy, DK Shivakumar, said Karnataka ranks second in Goods and Services Tax (GST) collection and is the biggest contributor to the country’s revenue. He added they were asking for their rights and share. Shivakumar said Karnataka sought drought relief funds but not even a single rupee was given.

On Tuesday, Tamil Nadu chief minister MK Stalin wrote a letter backing Vijayan’s protest and accusing the Union government of “arbitrarily” restricting the borrowing limit of the states by “misusing” its powers. Stalin said the fundamental principle of fiscal federalism the Constitution makers envisioned was under grave threat.

Karnataka, Tamil Nadu, and Kerala have alleged that the Union government has restricted their borrowing and the fund flow has been reduced due to the recommendations of the 10th to 15th Finance Commission.

Union finance minister Nirmala Sitharaman told Lok Sabha on Monday that there was no discrimination against any state as the disbursement of funds was as per guidelines of the Finance Commission and the Comptroller and Auditor General (CAG) reports.

Mahatma Gandhi National Rural Employment Guarantee Scheme funds for West Bengal have been stopped following CAG objections as the state failed to submit utilisation certificates.

Siddaramaiah has said Karnataka has suffered ₹1.87 lakh crore losses during the tenure of the 15th Finance Commission because of the decline in Central grants. He said the state’s devolution of funds has decreased from 4.71% under the 14th Finance Commission to 3.64% under the 15th Finance Commission, resulting in a loss of approximately ₹45,000 crore over the past four years. The cumulative loss over five years amounts to ₹62,098 crore.

In his budget speech on Monday, Kerala finance minister KN Balagopal said that the Union government has curtailed ₹57,400 crore in the current fiscal. “This includes ₹12,000 crore due to the cessation of GST compensation, ₹8,400 crore in this year’s revenue deficit grant, ₹7,000 crore made in the borrowing limit… ₹12,000 crore by considering public account money as public debt and reduction of ₹18,000 crore resulting from the decline of state’s divisible pool share from 3.87% to 1.925% during the 10th to 15th Finance Commission tenures.”

Balagopal cited the Union government’s guidelines and said Kerala has a borrowing limit of ₹39,626 crore. “The state budget was prepared considering the same. But Kerala has been allowed to borrow only ₹28,830 crore until now. The borrowing limit was cut short during in the middle of the fiscal without any prior notice based on improper calculation of public account balance,” Balagopal said.