High inflation, worsening law & order driving companies away from Karnataka: FM Sitharaman

Bengaluru: Union Finance Minister Nirmala Sitharaman said on Sunday that Karnataka was suffering higher inflation than the national average under the current Congress government, and the law and order situation was driving away companies out of the state.

Addressing a press conference at the BJP headquarters here, the Finance Minister said the Central government has provided Rs 2,95,818 crore in the last 10 years in comparison to Rs 81,791 crore in UPA's 10-year rule, and the Congress government’s contribution to the state was only high inflation, which is higher than the national average.

“Inflation between June 2023 and 2024, the national average was 5.4 per cent but Karnataka is at 6.1 per cent. The contrast, within Karnataka, between June 2022 and May 2023, the state had a lower inflation rate than the national average which was 6 per cent. Karnataka kept its inflation rate at 5.39 per cent,” the FM stated.

“There was a year not too far away when inflation was lesser in Karnataka than the national average. But, now, the inflation is higher than the national average. One knows the reasons. Petrol price was hiked by Rs 3, diesel by Rs 3.5, milk prices have gone up by Rs 5, and property guidance value has been hiked from 25 per cent to 30 per cent. Stamp duty charges are increased by 200 per cent to 500 per cent. Vehicle registration fee hiked by 3 per cent and additional 10 per cent lifetime tax on EV vehicles. Naturally, inflation is much higher than the national level,” the Union Minister stated.

"Revenue deficit is very high in Karnataka. The capital expenditure is not happening and is reduced. If you don’t spend money on capital expenditure, employment is not going to come to Karnataka. Unless the capital expenditure is spent, your demand will not increase, consumption will not increase,” she said.

“Open market borrowings have increased; it's already touched over Rs 1 lakh crore. Borrowing after borrowing is done to fulfil the promise,” she said indirectly referring to the freebies. “There was a time when Karnataka was in revenue surplus two years ago. Now it is a revenue deficit. I don’t want to name the companies going out. Law and order is worsening and because of this, industries are more scared to be here and they want to get out,” she underlined.

"The SC-ST funds are siphoned off. Blaming everyone else but yourself..., particularly in the Valmiki Tribal Board case ...what is going on in the state? With this kind of administration, a state which was a revenue surplus, a state which was spending capital expenditure, and a state which drew investments into Karnataka is now frightening investors," The Union Minister said.

“I don’t know whether they are consulting industry stakeholders before taking decisions,” she said indirectly referring to the decision on the language quota and increased working hours for techies.