Latest news with #Panagariya
Hindustan Times
16 hours ago
- Business
- Hindustan Times
Most states, including Uttar Pradesh, want share in Central taxes hiked to 50%: Finance commission chairman
A majority of the 28 states, including Uttar Pradesh, have demanded that the 16th Finance Commission should recommend an increase in the states' share in the divisible pool (of the Centre's tax revenue) from 41% to 50%, the commission's chairman Arvind Panagariya said during a visit to Lucknow on Wednesday. Panagariya also said Uttar Pradesh's tax collections are very good and the state has prudently managed its finances. He made these observations after a meeting with the Uttar Pradesh team led by chief minister Yogi Adityanath and viewing a presentation that additional chief secretary finance Deepak Kumar made before the finance commission at Lok Bhavan in the state capital. Panagariya called the chief minister's speech vibrant and said he (Adityanath) spoke about the state's progress in different areas and its expectations. The finance commission chairman also said, barring the Covid period, the state's fiscal deficit remained within permissible limits. The state's debt to GSDP ratio was also within manageable limits, he added. Noting that U.P's tax collections and GSDP have been on the rise, he said the state's expenditure is well designed. Panagariya said 22-23 or more of the 28 states have recommended an increase in the share of states. 'The Uttar Pradesh government, like most other states, has recommended to the Finance Commission that the share of states be increased from 41% to 50%,' Pangariya said, speaking to media persons, here on Wednesday. As Uttar Pradesh's share in the divisible pool came down marginally from 17.959% to 17.931% (2021-22 to 2025-26) following the 15th Finance Commission's recommendations, the state government requested the 16th finance panel to make changes in the horizontal devolution formula – the distribution of revenue among the states. The commission was also urged to make U.P-specific recommendations. The request for changes in the criteria for horizontal recommendation has been made as more weight given to population may work for the state, but the demographic performance that includes Total Fertility Rate (TFR) goes against it. As the finance commissions in the past have given more weight to the poorer states, Uttar Pradesh, with a lower per capita income, would be in an advantageous position if the income distance criteria is retained. The 15th Finance Commission had recommended 15% weight to population, 15% to area, 10% to forest and ecology, 2.5% to tax effort, 12.5% to demographic performance and 45% to income distance. The state government has requested the 16th Finance Commission to change the horizontal devolution criteria and give 22.5% weight to population, 10% to area, 5% to forest and ecology, 10% to tax effort, 7.5% to demographic performance and 45% to income distance. Panagariya said the commission would finalise its recommendations after completion of consultations with the Union ministries. He said with its UP visit, the commission's consultations with 28 states are complete. About U.P's loss-making public sector units, he said the state government informed the commission about the move to privatise two power distribution companies. The commission also met representatives of panchayat raj institutions, urban local bodies, trade and industry and political parties. The commission, which visited Ayodhya on Tuesday, will wind up its Uttar Pradesh tour by paying a visit to Varanasi on Thursday. Besides making recommendations regarding vertical devolution (distribution between the Centre and the states), the Finance Commission also makes recommendations about horizontal devolution — the distribution among the states. As per the provisions of Clause (1) of Article 280 of the Constitution of India, the Finance Commission is constituted every five years to make recommendations to the President of India about the distribution of net proceeds of central taxes between the Centre and the states. The 16th Finance Commission will submit its report for the five-year period from 2026-2027 to 2030-2031. The 15th Finance Commission covered a six-year period. It submitted two reports — the first for 2020-2021 and the second for 2021-2022 to 2025-2026. .
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Business Standard
a day ago
- Business
- Business Standard
Over 22 Indian states demand 50% share in central tax revenue allocation
More than 22 of India's 28 states have asked the 16th Finance Commission to raise their share of the divisible tax pool from the current 41 per cent to 50 per cent, Commission chairman Arvind Panagariya said on Wednesday. The Commission visited Lucknow as part of its ongoing consultations with state governments across the country. Addressing the media, Panagariya noted that states such as Uttar Pradesh have joined the majority in seeking a greater share of central tax revenues. 'At present, states receive 41 per cent of the total divisible tax revenue, while the Centre retains 59 per cent... UP, along with many others, has recommended increasing the state share to 50 per cent,' said Panagariya, according to a report by PTI. Commission yet to confirm recommendation Despite the widespread demand, Panagariya did not confirm whether the Commission would include this proposal in its final recommendations. He did, however, note that past Finance Commissions' recommendations have generally been accepted by the Centre without changes. The 16th Finance Commission was constituted on 31 December 2023 under Article 280 of the Constitution. It has been tasked with recommending how tax revenues should be distributed between the Centre and the states for the five-year period beginning 1 April 2026. The Commission is expected to submit its report by 31 October 2025, covering fiscal years 2026–27 to 2030–31. States carry heavier spending responsibilities State governments account for over 60 per cent of total public expenditure in the country, with a significant focus on social infrastructure such as healthcare, education, and law and order. In contrast, the Union government primarily allocates spending to physical infrastructure. Since the rollout of the Goods and Services Tax (GST) in July 2017, states have experienced a decline in their autonomy over revenue collection. Their capacity to raise funds independently has been curtailed, increasing their dependence on central transfers. A related concern is the Union government's increased use of cesses and surcharges, which are not shared with the states. Since the onset of the Covid-19 pandemic, the share of these levies in the Centre's gross tax revenue has risen from 9–12 per cent to over 15 per cent. Last year, Tamil Nadu Chief Minister MK Stalin had called for an increase in the state's share of central taxes to 50 per cent, citing concerns over reduced devolution of funds and mounting financial burdens due to centrally-sponsored schemes. Speaking to Panagariya in Chennai, Stalin maintained the need for a revised fiscal framework that supports states like Tamil Nadu. He argued that allocating additional funds to high-performing states would enhance India's "overall development and economic strength".
Time of India
a day ago
- Business
- Time of India
Majority of states want tax revenue share with Centre hiked to 50%: Arvind Panagariya
The majority of states in India, including Uttar Pradesh, are advocating for a significant increase in the tax revenue distribution from the Centre. The 16th Finance Commission, led by Chairman Arvind Panagariya, is considering the request from over 22 states to raise their share to 50% from the current 41%. Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads Majority of 28 states have asked the Finance Commission to increase tax revenue distribution between the Centre and states to 50 per cent, the panel's chairman said here on present, states get 41 per cent of the tax revenue while the rest goes to the Centre, 16th Finance Commission Chairman Arvind Panagariya panel was in the Uttar Pradesh capital as part of its consultation visit to all states in the a press conference with other commission members, Panagariya told reporters, "The previous finance commission had set the (tax revenue) share at 41 per cent for states and 59 per cent for Centre. That's how it is now.""Like most other state governments, UP has also asked for the share to be raised to 50 per cent from the present 41 per cent. Out of the 28 states, more than 22 have made this recommendation," Panagariya the chairman declined to reveal if the Finance Commission's recommendations to the President would include in his address, Panagariya noted that the convention in the past has been that the recommendations of the Finance Commission have been accepted in the exact 16th Finance Commission of India was constituted on December 31, 2023, under Article 280 of the Constitution. Its primary mandate is to recommend the distribution of tax revenues between the Centre and the states, for a five-year period commencing April 1, Commission is expected to submit its report by October 31, 2025. Its recommendations would be for 2026-27 to 2030-31.
Time of India
6 days ago
- Business
- Time of India
State seeks over 3 lakh crore from fin panel; ‘special status' unlikely
1 2 Ranchi: Jharkhand on Friday placed a cumulative demand of Rs 3,03,527.44 crore for various projects spanning 23 departments for the next five years before the 16th Finance Commission. The demand was placed before the 11 members of the commission, who are here on their final day of the four-day tour of the state on Friday The members, however, indicated that the state's demand for a "special status" would be unlikely. In his presentation before the commission team headed by its chairman Arvind Panagariya, state finance minister Radha Krishana Kishore listed out falling revenues due to the implementation of the GST, delayed and non-payment of central grants and other dues for years, which is making it difficult for the administration to fast-track development of the state. The Jharkhand govt has also proposed an increase in the devolution of funds from the existing 41% in "vertical devolution" to 50% for the states and has gone on to suggest that the devolution of grants must also be considered based on revenue losses of a state because of the GST. Citing how GST is impacting the state revenues, Kishore said after July 2022, states have stopped receiving GST compensation from the Centre. "Jharkhand is less of a consumer and more of a producer state but GST being a use-based tax system, we have to bear its loss. Based on the current trends, a loss of about Rs 61,677 crore is estimated in the next five financial years from 2025-26 to 2029-30. Therefore, we expect the finance commission to keep this in mind and provide additional grants so that we can deal with the losses," he stressed. The minister also highlighted how out of the proposed Rs 1.5 lakh crore to Jharkhand by the 15th Finance Commission for the development of various sectors, the state has only received Rs 12,398.02 crore for sectors like rural roads, culverts, disaster management, urban development and health. Meanwhile, Panagariya told the media that the commission had heard all views and would make final recommendations to the Union govt for the devolution of funds over the next five years after meeting all state govts. "Jharkhand is our 27th visit and Uttar Pradesh will be the last one," he said, after the deliberations with different stakeholders in the state, including the govt representatives. On state's demands and suggestions for devolution of funds between the Centre and the state, Panagariya said, "Under 15th Finance Commission, 15% weightage was given to the population of a state to grant funds, which Jharkhand demanded to increase it to 17.5%. Similarly, it demanded 50% weightage on per capita as Jharkhand is among the lowest in this segment in the country. It, however, came up with an interesting and creative demand of 2.5% weightage based on GST losses. " Asked about state govt's regular demand for a "special status", the commission member said it is unlikely to happen. "It is because special status was in practice when the planning commission existed. After it got dissolved and Niti Aayog came into being, no such criteria exist," he added. On the other hand, state water resources and excise department minister Yogendra Prasad said, "We (govt) have apprised the commission members in detail about our needs, challenges and requirements across different sectors. We are optimistic of a suitable response in the coming days," Prasad told reporters.
The Print
19-05-2025
- Business
- The Print
16th Finance Commission will submit its report to Centre by Oct 31: Chairman
The chairman praised Uttarakhand for moving ahead rapidly on the development front and said that in view of the difficult geographical conditions, extensive discussions will be held to find solutions to the challenges being faced by other hill states, including Uttarakhand. Panagariya said this in a meeting of the commission held here with Chief Minister Pushkar Singh Dhami. Dehradun, May 19 (PTI) Chairman of the Sixteenth Finance Commission Dr. Arvind Panagariya on Monday said the commission will submit its report to the central government by October 31. Earlier in the meeting, CM Dhami presented his views on the financial situation, challenges and development needs of the state. He requested the Finance Commission to provide suitable compensation in keeping with the spirit of 'environmental federalism' in view of Uttarakhand's 'eco service cost', increase the weightage of forest cover in 'tax-devolution' to 20 per cent and consider special grants for proper management and conservation of forests in the state. The Chief Minister said that in the last 25 years, Uttarakhand has made remarkable progress in the field of financial management like other areas. The size of the state budget has crossed Rs 1 lakh crore, while in the SDG Index Report of the year 2023-24 released by NITI Aayog, Uttarakhand has emerged as the leading state in the country among the states achieving the goals of sustainable development, he said. Referring to the two main challenges being faced by the state due to more than 70 per cent of the total geographical area of Uttarakhand being covered by forests, Dhami said that on one hand this leads to more expenditure for the conservation of forests, while on the other hand, due to the prohibition of any other development activity in the forest area, 'eco service cost' also has to be borne. In this regard, he requested for appropriate compensation to the State in accordance with the spirit of 'Environmental Federalism', increasing the weight prescribed for forest cover in 'Tax-Transfer' by 20 percent and special grant for proper management and conservation of forests in the State. He said that since the state's industrial package ended in 2010, the locational disadvantage is not being met, while special budget provisions have to be made in the hilly regions of the state due to difficult geographical conditions and other practical difficulties as the private sector participation in important sectors like education and health is very limited. Describing Uttarakhand as very sensitive to natural disasters, the CM said that the state needs continuous financial support to effectively deal with disasters and for relief and rehabilitation work. Dhami, referring to the limited possibilities of hydropower generation in Uttarakhand due to the rules implemented after the Ganges was declared a national river, said that due to this the hydropower sector is not able to make the expected contribution and there is a huge loss in the field of employment along with revenue. He also requested the Finance Commission to provide special assistance in view of the higher cost involved in developing additional infrastructure for transport, drinking water, health, waste management and other services in view of the 'floating population' visiting pilgrimage sites. A delegation of the party led by State Congress Vice-President Suryakant Dhasmana also met Dr. Panagariya and requested for a green bonus for the state and economic package to stop migration and consider the special geographical conditions of the state. Dhasmana demanded that the state should be given a green bonus as compensation for its environmental services, protection of water, forest and biodiversity for the country. He said that there should also be a provision of a special package for the state for long-term disaster management preparedness. PTI DPT NB NB This report is auto-generated from PTI news service. ThePrint holds no responsibility for its content.
