CM Siddaramaiah requests FM Sitharaman for pro-growth approach in tax devolution

Bengaluru/New Delhi, June 24 Karnataka Chief Minister Siddaramaiah on Tuesday met Union Finance Minister Nirmala Sitharaman to request the Central government to follow a pro-growth approach in tax devolution among the states by the 16th Finance Commission.

“The Chief Minister has briefed the Finance Minister that under the 15th Finance Commission award, Karnataka’s share in tax devolution declined from 4.713 per cent to 3.647 per cent, a reduction of over 23 per cent. The state 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 statement released by the Chief Minister’s Office said.

A major reason for this is the over-reliance on the income-distance criterion, which received 45 per cent weightage under the 15th Finance Commission, the statement said, adding that Karnataka has requested the 16th Finance Commission 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.

"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 Fiscal Responsibility and Budget Management (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," the CMO statement said.

"The Chief Minister has also highlighted the developmental challenges of Bengaluru, Kalyana Karnataka and Malenadu (hilly) regions. A fair and pro-growth devolution will accelerate the state’s growth," it said, adding that Siddaramaiah emphasised that Karnataka’s proposals are not a request for special treatment, but, "on the contrary, it will improve overall national resource mobilisation and foster cooperative and competitive federalism".

The Chief Minister also requested the Union 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, the statement said.

Earlier, Siddaramaiah met President Droupadi Murmu at the Rashtrapati Bhavan in Delhi and presented the iconic traditional 'Mysuru Peta' to her. The Chief Minister also discussed the pending bills with President Murmu.

CM Siddaramaiah also met Bollywood actor Aamir Khan at the Rashtrapati Bhavan. The two greeted each other and exchanged pleasantries.

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