CM meets Sitharaman, seeks pro-growth tax devolution

New Delhi: Chief Minister Siddaramaiah on Tuesday met Union Finance Minister Nirmala Sitharaman to seek the Centre’s support for a pro-growth approach in tax devolution among states by the 16th Finance Commission. During the meeting, Siddaramaiah briefed Sitharaman on Karnataka’s significant losses under the 15th Finance Commission award, an official statement said.

The state’s share in tax devolution declined from 4.713 per cent to 3.647 per cent -- a reduction of over 23 per cent. Karnataka was also denied Rs 11,495 crore in special grants, resulting in a total loss of Rs 80,000 crore during the award period.

The chief minister attributed this decline primarily to the over-reliance on the income-distance criterion, which received 45 per cent weightage under the 15th Finance Commission. Karnataka has requested the 16th Finance Commission to reduce the weightage for income-distance by 20 percentage points and reallocate it to fiscal contribution -- the state’s share in national GDP.

The state has also proposed discontinuing Revenue Deficit Grants in their current format, arguing they contradict fiscal discipline principles outlined in the FRBM framework. Instead, Karnataka suggested redistributing the same amount -- 1.92 per cent of Gross Union Receipts under the 15th Finance Commission -- among all states using the horizontal devolution formula.

Siddaramaiah highlighted the developmental challenges facing Bengaluru, Kalyana Karnataka and Malenadu regions, emphasising that fair and pro-growth devolution would accelerate the state’s growth trajectory.

The chief minister clarified that Karnataka’s proposals were not a request for special treatment but would improve overall national resource mobilisation and foster cooperative and competitive

federalism.