Did CM Siddaramaiah Appeal to FM Sitharaman for a Pro-Growth Tax Devolution Strategy?
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Synopsis
In a recent meeting, Karnataka's CM Siddaramaiah urged FM Nirmala Sitharaman to adopt a pro-growth approach in tax devolution for the 16th Finance Commission. He highlighted critical issues facing Karnataka's fiscal share and the need for equitable resource distribution among states.
Key Takeaways
- Karnataka's share in tax devolution has declined significantly.
- CM Siddaramaiah emphasized a need for a pro-growth approach.
- Proposals include reducing income-distance weightage and redistributing revenue grants.
- The aim is to enhance fiscal contribution and cooperative federalism.
- Developmental challenges in key regions were highlighted.
Bengaluru/New Delhi, June 24 (NationPress) The Chief Minister of Karnataka, Siddaramaiah, had a meeting with Union Finance Minister Nirmala Sitharaman on Tuesday, urging the Central government to adopt a pro-growth strategy in tax devolution among states for the upcoming 16th Finance Commission.
According to a statement from the Chief Minister’s Office, he informed the Finance Minister that Karnataka’s share in tax devolution had decreased from 4.713 percent to 3.647 percent under the 15th Finance Commission, which translates to a drop of over 23 percent. The state also missed out on receiving Rs 11,495 crores in special grants, leading to an overall loss of Rs 80,000 crores during this award period.
The statement highlighted that a significant factor contributing to this decline was the excessive dependence on the income-distance criterion, which was assigned a 45 percent weightage under the 15th Finance Commission. Karnataka has urged the 16th Finance Commission to reduce this weightage by 20 percentage points and reallocate it to fiscal contribution, reflecting the state’s share in the national GDP.
“We have also proposed discontinuing the current format of Revenue Deficit Grants, as they contradict the principles outlined in the Fiscal Responsibility and Budget Management (FRBM) framework. Instead, we suggest redistributing the same amount, which was 1.92 percent of Gross Union Receipts under the 15th Finance Commission, among all states using a horizontal devolution formula,” the statement noted.
The Chief Minister also pointed out the developmental challenges faced by Bengaluru, Kalyana Karnataka, and the Malenadu (hilly) regions. He emphasized that an equitable and pro-growth devolution strategy could significantly enhance the state’s growth trajectory.
Furthermore, Siddaramaiah highlighted that Karnataka’s proposals are not requests for preferential treatment but rather aim to enhance national resource mobilization and promote cooperative and competitive federalism.
In addition, he requested the Union Finance Minister to incorporate these proposals into the Union government’s Memorandum for the 16th Finance Commission, as a growth-oriented devolution would empower all states to optimally contribute to India’s developmental journey, the statement added.
Earlier, Siddaramaiah had a meeting with President Droupadi Murmu at Rashtrapati Bhavan in Delhi, where he presented her with the iconic traditional 'Mysuru Peta' and discussed pending legislation with her.
Additionally, CM Siddaramaiah met Bollywood actor Aamir Khan at Rashtrapati Bhavan, exchanging greetings and pleasantries.
Point of View
The request made by Karnataka's CM Siddaramaiah is a significant move. It reflects a broader concern regarding equitable resource allocation among states, particularly in the context of growth and fiscal responsibility. The emphasis on a pro-growth framework indicates a necessity for cooperative federalism, ensuring that all states can effectively contribute to national progress.
NationPress
24/06/2025
Frequently Asked Questions
What was the primary request made by CM Siddaramaiah?
CM Siddaramaiah requested the Central government to adopt a pro-growth approach in tax devolution among states for the 16th Finance Commission.
Why did Karnataka's tax devolution share decline?
Karnataka's share in tax devolution declined due to an over-reliance on the income-distance criterion under the 15th Finance Commission.
What specific changes did Karnataka propose for the 16th Finance Commission?
Karnataka proposed reducing the weightage for income-distance by 20 percentage points and redistributing the revenue deficit grants among states.
What are the implications of the proposed changes for Karnataka?
If implemented, the proposed changes could significantly enhance Karnataka’s growth trajectory and overall fiscal health.
Did CM Siddaramaiah discuss any other matters during his visit?
Yes, he also met with President Droupadi Murmu and presented her with the traditional 'Mysuru Peta,' discussing pending bills.
