New Delhi [India], June 24 : Karnataka Chief Minister Siddaramaiah on Tuesday met Union Finance Minister Nirmala Sitharaman to request the centre to advocate for a pro-growth approach in the tax devolution among the states by the 16th Finance Commission (FC).
According to an official release, the Chief Minister informed the Finance Minister that Karnataka's share in tax devolution had declined significantly under the 15th Finance Commission, from 4.713 per cent to 3.647 per cent, amounting to a reduction of over 23 per cent.
The release further stated that Karnataka was also not allocated Rs 11,495 crores of the special grants. As a result, the state has lost a total of Rs 80,000 crores during the award period.
A major reason for this is the overreliance on the income-distance criterion, which received 45 per cent weightage under the 15th FC. The state has requested that the 16th FC reduce the weightage for income distance by 20 percentage points and reallocate it to fiscal contribution, which is the state's share of national GDP.
"We have also requested to discontinue Revenue Deficit Grants in their current format, as they are against the principles of fiscal discipline as proposed in the FRBM framework. We have proposed that the same amount -- which was 1.92 per cent of Gross Union Receipts under the 15th Finance Commission -- should be redistributed among all states using the horizontal devolution formula," Siddaramaiah said in the press statement.
The Chief Minister has also highlighted the developmental challenges in the Bengaluru, Kalyana Karnataka, and Malenadu regions, and said that a fair and growth-oriented devolution formula would help accelerate the state's progress.
The Chief Minister emphasised that Karnataka's proposals are not a request for special treatment. On the contrary, it will improve overall national resource mobilisation and foster cooperative and competitive federalism.
The meeting concluded with the Chief Minister requesting the Finance Minister to include these proposals in the Union Government's Memorandum to the 16th Finance Commission, as a growth-friendly devolution will ensure that all states are empowered to contribute their best to India's development journey.