Karnataka Chief Minister Siddaramaiah met the 16th Finance Commission in Delhi on Friday and “exposed a clear imbalance in the fiscal return”, told the Commission that “Every rupee contributes to the taxes of the Karnataka Union, it only receives 15 money in turn”.
A statement issued after the meeting by the CM’s office said that Siddaramaiah said that under the 15th Finance Commission, Karnataka’s stake was reduced by 4.713% to 3.647%.
The overall share allocated to all states from central taxes had reduced by 41% for 2021-26, as compared to 42% in the previous cycle, mainly due to the construction of the center areas of Jammu and Kashmir and Ladakh. Siddaramaiah demanded a large allocation from the central tax pool to the state for a five -year period starting from April 1, 2026.
According to the statement, Karnataka “proposed that the share of taxes developed to states (vertical deviations) increases to at least 50% (from 1 April, 2026), and that cess and overload can be shared at 5%”. “The state also recommended the union non-tax revenue in the divisible pool.”
“To share funds between states (horizontal deviations), Karnataka suggested that each state maintains about 60% that contributes to it, 40% is going to less developed states, ensuring both development and equity,” it said.
Siddaramaiah told the Commission that “To make the formula fair, Karnataka has proposed to reduce the weight of income-and-a-day criterion and give overweight to the state’s economic contribution, so that high-performing states are not punished, but encouraged,” the statement said.
The state also called for “significant reforms” to make the fiscal deviations “more development-oriented, forecast and fair” and exposed three “major issues”-growing inequalities in individual deviations; Ferritory design of revenue deficit grants, and unexpected nature of state-specific grants.
The story continues below this advertisement
During the meeting, the CM told the Commission that the state has recommended the change of special grants of discretion along with sources-based allocation of 0.3% of the gross union receipts.
The statement said that the CM also sought support for investment of Rs 1.15 lakh crore to strengthen the infrastructure of Bengaluru in view of its major role in Karnataka economy.
,
