Louder chorus now for hike in states' share of central tax revenue

Addressing a press conference in Lucknow last week, Chairman of the 16th Finance Commission Arvind Panagariya said Uttar Pradesh (UP), like most other states, has called for the states’ share in the central divisible pool of tax revenue to be raised to 50 per cent from the current 41 per cent.

  The Bharatiya Janata Party (BJP)-ruled state joined the list of other states, including those ruled by the Opposition, to make such a demand.

  “The previous finance commission had set the (tax revenue) share at 41 per cent for states and 59 per cent for (the) Centre. That’s how it is now.”

  According to Panagariya, of the 28 states, more than 22 have recommended increasing tax revenue distribution between the Centre and states to 50 per cent. The commission was in UP as part of its consultation visit to all states in the country. Panagariya said the Commission’s visit to UP marked the culmination of the panel’s consultations with various states through visits. “However, our consultations with some central ministries would continue,” he said. Panagariya declined to reveal if the Finance Commission’s recommendations to the President, to be submitted by October 31, of this year, would include this.

  “Practically speaking, I can’t tell you (the press) what the commission will do because I also don’t know it yet as it’s a decision of full membership of the commission. What I can speculate though is it is not going to be 50 per cent because that would be too large a jump and such a large jump upsets too many cards,” he said.

  Southern states like Kerala have held conclaves of Opposition-ruled states to demand a 50 per cent share for states.