New Delhi | Union Finance Minister Nirmala Sitharaman on Monday came down heavily on allegations that the Centre is withholding funds meant for non-BJP governed states, saying it is a "politically-vitiated narrative" that "vested interests" are happy to go about saying.

Replying to a question by Congress leader Adhir Ranjan Chowdhury in the Lok Sabha on the Karnataka government's claim that the Centre is not releasing funds due to it, Sitharaman said such a situation cannot happen as the "system is well placed" and the central government works according to recommendations of the Finance Commission.

"This apprehension that some states are being discriminated against is a politically-vitiated narrative which, I am sorry to say, vested interests are happy to go about saying," she said during Question Hour.

Sitharaman added that no Union finance minister can play with the Finance Commission's recommendations.

"This is just not a possibility that any finance minister can intervene to say that 'I don't like this state, stop payment'. No way. It can't happen that way. The system is well placed," she said.

There have been reports that Karnataka Deputy Chief Minister DK Shivakumar said the Congress' state unit -- including all MLAs, MLCs and MPs -- will protest against the Union government on February 7 in New Delhi for not allocating proper funds to the state in the interim Budget.

"Karnataka is the state that generates the second-highest tax in the country and it is sad that our state gets a setback every time. For the last five years, the BJP government has been ignoring Karnataka. This is unfair," he had said.