K'taka Seeks Fair Share of Central Taxes, Citing Economic Contribution

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Karnataka's Chief Minister Siddaramaiah has appealed to the 16th Finance Commission to revise the state's share of central taxes, arguing that the current formula is unfair. The state claims that its share has dropped from 4.71% to 3.64% over the past two finance commissions, resulting in a loss of approximately ₹80,000 crore. Siddaramaiah stated that Karnataka, which is a major contributor to the country's economic growth, receives one of the lowest shares of central taxes and grants relative to its contribution. The state has demanded a restoration of its earlier 4.71% share, citing fairness. The state government has also requested a higher allocation for Bengaluru's infrastructure, estimated at ₹1.15 lakh crore over five years, and asked the commission to recommend at least ₹27,793 crore. Additionally, the state has sought an increase in the states' share of central taxes from 41% to 50% and a cap on cesses and surcharges at 5% of central revenue. Karnataka has also criticized the use of the 'income distance' formula, which it believes penalizes states with higher average incomes. The state has sought a reduction in the weight of this formula from 45% to 25%. Furthermore, it has objected to the shift in the Gross State Domestic Product base year from 2004-05 to 2011-12, which it claims overstated Karnataka's growth due to the IT boom in Bengaluru. The state has also requested a more realistic assessment of population weightage, citing the use of outdated 2011 population data instead of 1971 figures. Karnataka has demanded a scientific recalculation of allocations under the National and State Disaster Response Funds, as it has suffered losses of ₹1.56 lakh crore from natural disasters between 2018 and 2024. Siddaramaiah has also proposed a revised formula for decentralization, giving 60% weight to population, 20% to geographical area, and 20% to a devolution index. The state has allocated ₹25,000 crore over five years for the Kalyana Karnataka region and requested matching grants from the Centre. Additionally, it has sought special grants for the ecologically sensitive Malnad, coastal, and Western Ghats regions, as well as support for irrigation in dryland areas.