Karnataka to seek increase in devolution of funds under 16th Finance Commission
Context
- Karnataka plans to demand more devolution of funds during the 16th Finance Commission meeting in Delhi.
- CM Siddaramaiah, along with MLA Basavaraj Rayaraddi and senior officials, will attend discussions with Arvind Panagariya, Chairman of the 16th FC.
Issue with 15th Finance Commission
- 15th FC (2020–2026) reduced Karnataka’s share from 4.71% (14th FC) to 3.64%, leading to:
- Estimated loss of ₹62,098 crore to Karnataka during the award period.
- Karnataka receives back only ₹0.29 per ₹1 contributed to the Central tax pool.
- In comparison: Bihar: ₹7.06,Uttar Pradesh: ₹2.73
Karnataka’s Demands to 16th Finance Commission
- Increase horizontal devolution share to 5%.
- Include Cess & Surcharges in the divisible pool:
- Centre collects nearly ₹5 lakh crore annually in taxes from Karnataka.
- Karnataka receives only around ₹55,000 crore (including grants).
About the 16th Finance Commission
- Will be responsible for devolution of funds from April 1, 2026.
