Karnataka CM Calls for Fair Share of Resources in Finance Commission Allocation

Karnataka Chief Minister Siddaramaiah stressed the need for equitable resource distribution between economically advanced and poorer states, highlighting the impact of high equity emphasis on well-performing states and calling for constitutional amendments to ensure fairer sharing of non-tax revenues and divisible pool funds.

Karnataka Chief Minister Siddaramaiah emphasized the need for a balanced approach in resource distribution between economically advanced and poorer states during a meeting with Chairman of the 16th Finance Commission Arvind Panagariya. He pointed out that extremely high emphasis on equity could negatively impact the incentives for well-performing states, and that taxpayers expect their contributions to benefit their own regions.

Siddaramaiah also highlighted that the Union Government's increasing reliance on cesses and surcharges has led to a disproportionate growth in the divisible pool compared to Gross Tax Revenue, causing significant losses to states. Karnataka, for example, faced a loss of Rs 53,359 crore from 2017-18 to 2024-25 due to non-sharing of these funds.

He further argued that a larger share of resources generated by the states should be returned to them, recommending that 60% of a state's contribution to the divisible pool be allocated back to it. Siddaramaiah called for a Constitutional amendment to include all non-tax revenues in the divisible pool to ensure a fair reward for state efficiency and performance.

(With inputs from agencies.)