Latest news with #15thFC
Deccan Herald
01-08-2025
- Business
- Deccan Herald
KPCC protests in Delhi demanding higher tax share to state
For every rupee Karnataka contributes to the Union taxes, it receives only 15 paise in return. The reduction in Karnataka's share under the 15th FC from 4.713 per cent to 3.647 per cent has resulted in a cumulative loss of over Rs 80,000 crore during the award period, the protesters alleged.
India Gazette
24-06-2025
- Business
- India Gazette
Advocate for pro-growth approach in tax devolution among states: Siddaramaiah tells Sitharaman
New Delhi [India], June 24 (ANI): 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. (ANI)
The Hindu
24-06-2025
- Business
- The Hindu
Adopt growth-oriented approach in tax devolution, Siddaramaiah tells Nirmala Sitharaman
Urging the Centre to adopt a pro-growth approach in tax devolution among the States by the 16th Finance Commission, Chief Minister Siddaramaiah on Tuesday highlighted the developmental challenges in Karnataka. The Chief Minister, during his meeting with Union Finance Minister Nirmala Sitharaman in Delhi on Tuesday, highlighted the developmental challenges in Bengaluru, Kalyana Karnataka, and Malnad regions, and argued that a fair and pro-growth devolution would accelerate the State's growth. Special grants The State has sought special grants to Bengaluru since it requires ₹1.15 lakh crore to undertake capital work, while grants have been sought for the Malnad region affected by floods. The State has also sought grants for the Kalyana Karnataka region that is covered under the Article 371 J providing special status, but is yet to receive money from the Centre. Claiming that Karnataka has lost a total of ₹80,000 crore during the award period of the 15th Finance Commission, the Chief Minister said that Karnataka's share in tax devolution declined from 4.713% to 3.647%, while the State was also not allocated ₹11,495 crore of the special grants. A major reason for this, he pointed out, was the over-reliance on the income distance criterion, which received 45% weightage under the 15th FC. 'The State government has requested the 16th FC that the weightage for income distance should be reduced by 20 percentage points and reallocated to fiscal contribution, which is the State's share in the national GDP,' he said. The Chief Minister told reporters in Delhi that his meeting with the Finance Minister followed his earlier meeting with the chairperson and members of the 16th Finance Commission. He said that an additional memorandum has been submitted. 'Karnataka's population constitutes 5% of the country's population, but the State contributes 8.7% to the GDP, which is third in the country. In GST collection, we are second in the country.' Revenue deficit grants Karnataka has also requested the Centre to discontinue the Revenue Deficit Grants in their current format since they are against the principles of fiscal discipline as proposed in the Fiscal Responsibility and Budget Management framework. The State has proposed that the same amount — which was 1.92% of the gross union receipts under the 15th FC — should be redistributed among all States using the horizontal devolution formula. The Chief Minister said, 'Deficit grants have been given to Kerala and Tamil Nadu also. Give it to all States or remove it.'
Indian Express
24-06-2025
- Business
- Indian Express
Siddaramaiah meets Nirmala Sitharaman, seeks ‘growth-friendly devolution' of taxes under 16th Finance Commission
The Karnataka government Tuesday petitioned the Union government to advocate a pro-growth approach when taxes are devolved to states by the 16th Finance Commission (FC). In a meeting with Union Finance Minister Nirmala Sitharaman, Chief Minister Siddaramaiah requested the Centre to reduce the 'over-reliance on income-distance criterion' and discuss Revenue Deficit Grants in their current format. Karnataka's share in tax devolution was reduced by 23 per cent from 4.713 per cent of the divisible pool of taxes under the 14th FC to 3.647 per cent under the 15th FC. 'A major reason for this is the over-reliance on the income-distance criterion, which received 45% weightage under the 15th FC. The State has requested the 16th FC that the weightage for income-distance should be reduced by 20 percentage points and reallocated to fiscal contribution – which is the State's share in national GDP,' a statement issued by the Chief Minister's Office said. The income-distance criterion, one of the parameters used to allocate tax shares to states, refers to the prioritisation of states with lower per capita income by providing them with a larger share in the divisible pool of taxes. This is the second petition Karnataka submitted in June regarding the 16th FC, being implemented from the 2026-27 fiscal. The first was during the meeting between Siddaramaiah and Commission Chairman Arvind Panagariya on June 13. The Commission is expected to submit its report on the devolution of taxes and distribution of other tax shares to states by the end of October. Revenue Deficit Grants in their current format, Siddaramaiah said, 'are against the principles of fiscal discipline as proposed in the Fiscal Responsibility and Budget Management framework'. The grants should be redistributed among all states, Karnataka has urged in the meeting. These are among the multiple recommendations made by Karnataka to address the revenue loss suffered due to the reduced share in taxes. Siddaramaiah requested Sitharaman to include the proposals from Karnataka '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.' Karnataka has been at odds with the Central government over reduced share in taxes under 15th FC from 2021-22 to 2025-26. The special grant of 11,495 crore for Karnataka recommended by the 15th FC was also not released to Karnataka, due to which the state lost out on Central funds to the tune of Rs 80,000 crore. Last year, Siddaramaiah, along with Cabinet colleagues, staged a protest in Delhi against the 'injustice' in tax devolution and demanded the release of various grants assured by the Centre to the state. Last year, the Karnataka government petitioned the Supreme Court against the Central government over the delay in releasing relief for regions affected by the 2023 drought. The state estimated losses of Rs 35,162 crore due to crop loss in an area of 48 lakh hectares and sought Rs 18,174 crore in September 2023 to take up relief works. In April 2024, the Centre released Rs 3,454 crore to Karnataka.
The Hindu
13-06-2025
- Business
- The Hindu
Karnataka seeks hike in devolution of funds from Centre to 50%, more weight to a State's economic performance
To overcome a stark imbalance in the devolution of funds to Karnataka from the Centre, Chief Minister Siddaramaiah on Friday demanded that the share of taxes devolved to States (vertical devolution) be increased to at least 50%, and cess and surcharges be capped at 5% in the 16th Finance Commission (FC). He also sought support for ₹1.15 lakh crore investment to strengthen Bengaluru's infrastructure, given its major role in Karnataka's economy. Bridging regional gaps During a meeting with the 16th FC Chairman Arvind Panagariya and panel members in New Delhi, the Chief Minister highlighted the need to bridge regional gaps in Kalyana Karnataka and Malnad, which earn low incomes and have poor infrastructure. The State recommended including Union non-tax revenues in the divisible pool. For sharing funds among States (horizontal devolution), Karnataka suggested that each State retain about 60% of what it contributes, with 40% going to less-developed States, ensuring both growth and equity. To make the formula fairer, Karnataka has proposed reducing the weight of the income-distance criterion and giving more weight to a State's economic contribution, so that high-performing States are not penalised, but encouraged. In its memorandum to the FC, Karnataka has called for critical reforms to make the fiscal devolution system more growth-oriented, predictable, and fair. Three key issues The State has highlighted three key issues such as the growing disparities in per-capita devolution, the flawed design of revenue deficit grants, and the unpredictable nature of State-specific grants. The Chief Minister said that for every rupee Karnataka contributes to the Union taxes, it receives only 15 paise in return. The reduction in Karnataka's share under the 15th FC from 4.713% to 3.647% has resulted in a cumulative loss of over ₹80,000 crore during the award period. Karnataka played a pivotal role in India's economic growth, contributing nearly 8.7% of the national GDP with just 5% of the population. It ranked second in GST collections, he said. Big drop in devolution Mr. Siddaramaiah said Karnataka's per capita devolution has dropped significantly, from 95% to 73% of the national average between the 14th and 15th Finance Commissions, despite increased GDP contribution. While noting that equity remained a key principle, he said it must be implemented in a time-bound and outcome-oriented manner, without disadvantaging States that demonstrate strong economic performance and sound fiscal management. He said that the income-distance weightage should be reduced by 20% and the same should be reallocated to reflect the States' fiscal contribution, as measured by their share in the national GDP. Mr. Siddaramaiah recommended replacing discretionary special grants with a formula-based allocation of 0.3% of gross Union receipts. However, he reiterated the request for grants for Bengaluru and other critical projects if the commission continues with such provisions. The Chief Minister emphasised that growth and equity must coexist, and that a strong Karnataka supported by fair fiscal devolution was essential for a strong India. '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 said. The FC's award period commences on April 1, 2026.
