Fight over funds puts further strain on Centre-Karnataka relations

A war is raging between Karnataka and the central government — and it is all about money.

The Congress-ruled state is now planning to move Supreme Court over the Union government’s delay in releasing central funds for the much-delayed Upper Bhadra Project (UBP).

Tension has been clearly escalating between the two sides since the Lok Sabha elections over issues ranging from GST to perceived apathy in the release of funds to finish irrigation projects.

Escalating tensions

Karnataka is also set to take an all-party delegation to Prime Minister Narendra Modi to seek justice on the Mahadayi project, to make use of water from its tributaries Kalasa-Banduri for the drought-hit northern districts.

If all this wasn’t enough, the Union Environment and Forest and Climate Change Ministry has told Karnataka to submit a detailed report on various aspects of the contentious Yettinahole inter-basin water transfer project to get money.

The first phase of the project was inaugurated on September 6. Now, the Centre seeking a report on the details of diversion of forest land and its impact on the region’s ecology and environment has irked the Karnataka government.

Don’t starve us, says Karnataka

Constantly told about caveats to secure central funding, a peeved Chief Minister Siddaramaiah wants Karnataka to retain 60 per cent of its contribution to the divisible tax pool.

His stand is clear: supporting poor states financially cannot come at the expense of Kannadigas.

According to Basavaraja Rayaraddi, economic adviser to Siddaramaiah, Karnataka is favouring an “economic alliance” with “growth-oriented states”.

Fresh row over UBP

Karnataka has also decided to host a conclave to deliberate on issues related to securing a fair share in the devolution of taxes to states by the Centre.

In a fresh row with the Centre, Karnataka has criticized the government’s stand on releasing Rs 5,300 crore in central assistance for the UBP. This could spark a showdown in Supreme Court, Karnataka Law Minister HK Patil told The Federal.

The funds were promised in the 2023-24 central Budget. Karnataka says it has not got even a rupee.

Centre’s conditions

Patil is furious with Debashree Mukherjee, secretary for the Jala Shakti Ministry, for stating that the release of central funds will depend on the availability of resources and geographic considerations under the scheme.

Patil is aghast. He says the promise to fund the project was made when the BJP ruled Karnataka. Now that the Congress is at the helm, the Centre refuses to abide by its own budgetary promises.

Karnataka had earlier approached the Supreme Court over the delay in the release of drought relief, leading the Centre to free Rs 3,454 crores after a judicial rap.

Delays push up costs

Amid the escalating tiff, the costs of irrigation projects have escalated, throwing fresh challenges to Karnataka.

A senior official told The Federal that around Rs 95,000 crore — nearly a third of the state budget — was required to complete projects that are on the brink of completion.

According to him, five significant irrigation and drinking water projects in Karnataka are languishing for several years, some for decades, depriving people of their benefits.

Languishing projects

These projects are Mahadayi, Mekedatu, Upper Bhadra, Upper Krishna, and Navali. The total cost of completion of these five projects is estimated at Rs 1.50 lakh crore.

Karnataka has taken the delay in the implementation of the ambitious Mahadayi project — which will quench the thirst of people of north Karnataka — very seriously. It remains stuck in environmental tangles, despite success in water allocation.

The National Wildlife Board (NWB) has refused to clear the project, citing environmental concerns.

Favouring Goa, not Karnataka?

But the same Board granted approval to the Goa-Tamnar 400 KV power transmission line that seeks to bring power from Chhattisgarh to Goa. The NWB is headed by Prime Minister Narendra Modi.

Significantly, the transmission lines pass through Karnataka’s dense forests and the Kali Tiger Reserve. In March, Karnataka had rejected the project citing environmental concerns, especially denudation of forests. But Modi told Karnataka to take a relook at the project.

A direction of the Goa Bench of the Bombay High Court to Goa, asking it to set up a tiger sanctuary in the Western Ghats, has evoked mixed reactions in Karnataka — and set off a debate on its implications for Karnataka’s Mahadayi project.

All-party team to Delhi

Siddaramaiah is planning to convene an all-party meeting in Bengaluru and take an all-party delegation to the Centre besides consulting legal options over the Union government’s moves.

Congress leaders accuse the Centre of discriminating against Karnataka. But former chief minister Basavaraj Bommai, now an MP, holds the earlier Congress-led UPA government responsible for the present Mahadayi crisis.

‘Modi government not neutral’

“The Centre’s authority to be a neutral arbiter is at an all-time low,” Mukhyamantri Chandru, who heads the Aam Aadmi Party in Karnataka, told The Federal.

Karnataka leaders had protested against the Centre's injustice over tax devolution in New Delhi in February 2024. It looks as if there could be a repeat performance.