Telangana Seeks Higher Share of Central Taxes from Finance Commission

Hyderabad: The Telangana government has requested the 16th Finance Commission to increase the share of states in central taxes from the current 41% to 50%. This appeal was made on Tuesday by Deputy Chief Minister Bhatti Vikramarka during a meeting with Finance Commission Chairman Arvind Panagariya and other members. The state argues that the growing number of cesses and surcharges, which are not distributed to states, have reduced their share of the total tax revenue.

In his address, Bhatti Vikramarka emphasized that this request is not limited to Telangana but is a common need for all states. He proposed modifying the formula for horizontal devolution to assign at least 50% weight to Gross State Domestic Product (GSDP) contributions. He believes that placing greater emphasis on GSDP would encourage states to implement reforms that boost productivity, attract investment, and create jobs, thereby enhancing overall national economic growth and reducing regional disparities.

Additionally, Bhatti urged the Finance Commission to reconsider the use of per capita income as the main criterion for horizontal devolution, arguing that it does not adequately address the disparities and development needs of states like Telangana.

The Telangana government asserts that increasing the vertical devolution of central taxes will provide states with the necessary fiscal flexibility to improve welfare programs, address infrastructure needs, and focus on local development priorities.