Raise states' share in central taxes to 50%: T'gana to 16th FinComm

Telangana Chief Minister A Revanth Reddy on Tuesday urged the 16th Finance Commission to increase the share of states in Central taxes from the existing 41 per cent to 50 per cent.

Highlighting that Telangana's debt mounted to over Rs 6.85 lakh crore, as of end of the last financial year, Reddy in his speech at the meeting with Commission Chairman Arvind Panagariya and members asked the panel to either restructure debt or offer the state additional assistance, as significant part of the revenue is being spent on repaying loans.

"I also strongly place my demand and I speak for all states on this increase (of) allocation of Central funds to states from 41 per cent to 50 per cent. I promise you, if you can do this, I will take a huge responsibility of Hon'ble Prime Minister Shri Narendra Modi's vision to make India a USD 5 trillion economy," Reddy said.
 

Deputy Chief Minister in-charge of Finance Bhatti Vikramarka, in his speech at the meeting urged the finance panel to ensure that states are given the necessary autonomy to tailor CSS (centrally-sponsored scheme) programmes to their specific development needs.

"In addition, we propose increasing the share of states in Central taxes from 41 per cent to 50 per cent. Over the years, cesses and surcharges that are not shared with states have increased, leaving states with a smaller share of total gross tax revenue," he said.

Increasing the vertical devolution will give states the fiscal space they need to strengthen welfare programmes, address infrastructure gaps and prioritise local development, Bhatti said.

He further said the state government urges the Finance Commission to reconsider the use of per capita income distance as the primary indicator in determining horizontal devolution as measuring prosperity and well-being solely by per capita income would deny Telangana the resources needed to address the inequities that exist within the state.

The state government is suggesting that the formula for horizontal devolution be modified to add at least a 50 per cent weightage to GSDP (gross state domestic product) contribution.

"A greater weight on GSDP would incentivize states to adopt reforms that improve productivity, attract investment, and create jobs, ultimately contributing to the national economy. This approach would not only make states more competitive but also help reduce regional disparities, encouraging more balanced growth across the country," he opined.

Pointing out that certain expenditures for schemes such as Rythu Bharosa, farm loan waivers, and food subsidies are often mislabelled as "freebies", he urged the Commission to recognise these programmes as necessary investments in the welfare of our people.

The 16th Finance Commission, led by its Chairman Arvind Panagariya, held meetings with several political parties, representatives of local bodies and industry chambers here on Monday as part of its visit to Telangana.