Chairman of the 16th Finance Commission Arvind Panagariya seemed to be unaware of Karnataka’s accusation that the Centre did not honour the interim relief of ₹5,495 crore recommended by the 15th Finance Commission for 2020-2021.
When his attention was drawn to the issue, he said: “I do not think the Centre has denied this. It has not been released yet.” However, member Ajay Narayan Jha intervened and said that the Centre did not take a positive view of the recommendation in the first report. “The second report or main report was on State and sector- specific grants for five years. The Centre said it will try and incorporate as part of the Centrally-sponsored scheme,” Mr. Jha said.
When his views were sought on the Centre not adhering to the commission’s recommendations, Mr. Panagariya said: “The Central government has always honoured the recommendation on devolution, local bodies, and disaster relief. In State-specific and sector-specific recommendations, the record is more mixed.”
What Karnataka has asked for
50% of Central divisible pool should be shared with States, which currently stands at 41%..
Cap on cesses and surcharges to 5% of the total tax income. Anything above 5% should be considered under divisible pool.
Set right anomaly of reduction in devolution between 14th and 15th Finance Commission by 1.66%.
Investment of ₹55,586 crore for Bengaluru over the next five years; ₹27,793 crore from the Centre.
Matching grant of ₹25,000 crore for development of Kalyana Karnataka region, while govt. has set aside same amount to overcome regional imbalance.
₹10,000 crore to manage natural disaster, relief, and rehabilitation in the sensitive Western Ghats.
What State could get
If the 16th Finance Commission accepts Karnataka’s recommendations to re-calibrate the criteria for devolution of funds, the State could get slightly above 1% increase in the total devolution that could translate to over ₹70,000 crore over five years. A senior Finance Department official said that though these calculations were not shared with the commission, the State could benefit substantially as it could get 4.8% in the horizontal devolution. Currently, Karnataka’s share in devolution stands around 3.647% as recommended by the 15th Finance Commission.
