'Get 15 Paise For Every Rupee Contributed': Karnataka Asks Finance Commission For 'Fair Tax Devolution'
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The state has also sought support of Rs 1.15 lakh crore investment to bolster Bengaluru's infrastructure and address regional disparities in Kalyana Karnataka and Malnad
Karnataka chief minister Siddaramaiah on Friday demanded a more equitable and growth-oriented fiscal federal structure before the 16th Finance Commission, led by chairman Arvind Panagariya.
Siddaramaiah highlighted the stark imbalance in fiscal returns despite Karnataka's significant contribution to the national economy.
In an additional memorandum submitted to the commission, Karnataka articulated its vision for reforms aimed at creating a predictable and fair devolution system.
'Karnataka's fiscal strength fuels national growth. It is time to ensure that growth is not penalised but rewarded. We urge the commission to adopt a balanced, forward-looking approach to devolution," the chief minister stated to the media after the meeting.
Siddaramaiah underscored the state's share, with Karnataka contributing nearly 8.7% of India's GDP with just 5% of the population and ranking second in GST collections. Despite this, Karnataka receives a mere 15 paise for every rupee contributed to union taxes, a figure drastically impacted by the reduction in its share from 4.713% to 3.647% under the 15th Finance Commission, leading to a cumulative loss of over Rs 80,000 crore.
What Karnataka wants
Karnataka has sought increased vertical devolution. It has asked to increase the states' share of taxes to at least 50% and cap cesses and surcharges at 5%, along with including union non-tax revenues in the divisible pool.
It is also urging a more balanced horizontal devolution. The CM proposed that states retain 60% of their contributions, with 40% directed to less-developed states to balance growth and equity.
He suggested a reduction in the weight of the income-distance criterion and greater emphasis on a state's economic contribution to avoid penalising high-performing states.
Siddaramaiah advocated for critical reforms to Revenue Deficit Grants and State-Specific Grants, noting that Karnataka's per capita devolution significantly dropped between the 14th and 15th Finance Commissions.
Focus Bengaluru
The state has sought support of Rs 1.15 lakh crore investment to bolster Bengaluru's infrastructure and address regional disparities in Kalyana Karnataka and Malnad.
Siddaramaiah has earlier launched campaigns like 'Our Tax, Our Right" to seek the state's rightful share in the devolution process.
First Published:
June 14, 2025, 02:39 IST
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