K’taka seeks higher tax share from 16th finance commission

KArnataka has urged the 16th Finance charge to revise what it calls unjust funding formulas and reconstruct a higher divvy up of exchange tax revenues, arguing that existing criteria have financially disadvantaged the state despite its strong economic contribution.In a statement, chief minister Siddaramaiah said the state government had placed “just and constitutional demands” before the commission on behalf of Karnataka’s people, including a fairer tax devolution, enhanced disaster relief funding and special grants.“Karnataka insists that a stronger federal structure can be upheld only through equitable distribution,” he said, appealing to media organizations to support a public campaign titled “Kannadigas’ struggle for justice”.The state contends that its share of central tax devolution fell sharply after the 15th Finance Commission. According to the statement, Karnataka’s share dropped from 4.71% under the 14th Commission to 3.64% under the 15th, which the government says led to a loss of roughly ₹80,000 crore.“If states were sharing ₹100 earlier, Karnataka received ₹4.71. The 15th Commission reduced it to ₹3.64, causing grave injustice,” Siddaramaiah said. He added that Karnataka, despite being “a driver in the country’s economic strength” and leading in per capita productivity, receives among the lowest central tax shares and grants relative to its contribution.The state has asked that its earlier 4.71% share be restored, saying any higher allocation would more accurately reflect fairness.For Bengaluru’s infrastructure, the state said ₹1.15 lakh crore would be needed over five years and asked the commission to recommend at least ₹27,793 crore.Siddaramaiah called for the states’ share of central taxes to be raised from 41% to 50% and for cesses and surcharges to be capped at 5% of central revenue, with the remainder shared with states. “This is my appeal on behalf of all citizens of Karnataka,” he said.A key objection relates to the weight given to the “income distance” formula. “Per capita income is only one measure of an economy, not the sole indicator,” the statement said, arguing that averaging incomes masks inequality. Citing global inequality trends, the chief minister said concentrating wealth among a small segment should not penalize states with higher average incomes. Karnataka has sought a reduction in the weight of income distance from 45% to 25%.The government also criticized the shift in the Gross State Domestic Product base year from 2004–05 to 2011–12, saying it overstated Karnataka’s growth due to the IT boom centered in Bengaluru. “Because of the base year change, Karnataka’s GSDP growth appeared inflated by 33%, while the average increase for other states was calculated at 5.6%. This has resulted in injustice,” the statement said, calling for a more realistic assessment.Karnataka further objected to the use of 2011 population data instead of 1971 figures, saying states that controlled population growth were effectively penalized. “Instead of encouraging population control, a severe punishment was imposed,” Siddaramaiah said, urging a return to the 1971 benchmark and a scientific reassessment of population weightage.The state has demanded scientific recalculation of allocations under the National and State Disaster Response Funds, saying Karnataka suffered losses of ₹1.56 lakh crore from natural disasters between 2018 and 2024. Despite recurring floods, droughts and extreme rainfall since 2002, the state said it was assigned only five risk factor points and has asked that this be raised to 15.Siddaramaiah also sought incentives for states that have advanced decentralization, proposing a revised formula that gives 60% weight to population, 20% to geographical area and 20% to a devolution index.For the Kalyana Karnataka region, the state has allocated ₹25,000 crore over five years and requested matching grants from the Centre, along with a ₹10,000 crore special package for environmental protection and disaster management.Special grants were also sought for the ecologically sensitive Malnad, coastal and Western Ghats regions, as well as support for irrigation in dryland areas.