Recommend capping cesses, surcharges at 5% of gross tax revenue: CM to Finance Commission
Bengaluru (PTI): Karnataka Chief Minister Siddaramaiah on Thursday requested the 16th Finance Commission to recommend capping of cesses and surcharges at five per cent of gross tax revenue, and anything exceeding that should be a part of the divisible pool.
In his address to Chairman of the 16th Finance Commission Arvind Panagariya and its members at a meeting here, he also requested the panel to recommend that vertical devolution should be at least 50 per cent of the divisible pool.
All non-tax revenues of the Centre should be included in the divisible pool of taxes by bringing the necessary Constitutional amendment, Siddaramaiah said.
The Chief Minister said economically advanced States are committed to supporting poorer States, but this should not come at the expense of their own residents or economic efficiency.
The Commission needs to carefully examine the impact of extremely high emphasis given to equity on the incentives of well performing states.
"Moreover, the taxpayers of such states expect their taxes to work for them. This creates public trust. The Finance Commission therefore needs to do a tightrope walk while balancing equity with efficiency and performance", Siddaramaiah said.
Due to the disproportionate weightage given to equity by the 15th Finance Commission, Karnataka and similarly placed States ended up getting penalised for their good performance, both fiscally and demographically, the Chief Minister said.
Noting that cesses and surcharges are not part of the divisible pool, the Chief Minister said over the years, the Union Government has increased its reliance on them.
This has led to the divisible pool not growing in the same proportion as the Gross Tax Revenue, he said. This has caused substantial loss to all the States.
The loss to Karnataka on account of the non-sharing of cesses and surcharges from the divisible pool is Rs. 53,359 crore during the period 2017-18 to 2024-25, according to him.
The Chief Minister said reduction in central financial transfers is placing severe limitations on the ability of the States to invest in physical and human infrastructure, adding, this issue must be addressed urgently.
"Economically advanced States are committed to supporting poorer States, but this should not come at the expense of their own residents or economic efficiency," Siddaramaiah said. "A larger proportion of resources generated by the States should be shared with them."
He requested the Commission to take a bold view and approach, whereby equity considerations are balanced with sufficient reward for efficiency and performance.
Karnataka recommends that 60 per cent of contribution of a state to the divisible pool, for inter se allocation among states, should be given to that state, Siddaramaiah said.
Karnataka, the Chief Minister said, has been central to India's growth story, adding, it contributes approximately 8.4 per cent to the national GDP with only about five per cent of the population. The State ranks second in total GST contribution to the country.
Despite Karnataka's substantial contribution of about Rs four lakh crore to the Gross Tax Revenue of the Union every year, the state gets about Rs 45,000 crore in the form of devolution and about Rs. 15,000 crore grant-in-aid.
"This means that for every rupee Karnataka contributes, only 15 paise is returned to the state," he pointed out.
The Chief Minister said Karnataka requires greater devolution by the Centre as it faces regional imbalances, especially in the Kalyana Karnataka region, and the challenges of urbanisation.
Bengaluru, Siddaramaiah said, needs an investment of Rs. 55,586 crore over the next five years out of which the State requested for a grant of Rs 27,793 crore.
Similarly, for the equitable development of the Kalyana Karnataka region, the State is investing Rs 25,000 crore and requested a matching grant of Rs.25,000 crores over five years from the 16th Finance Commission.
To ensure effective disaster mitigation and timely relief and rehabilitation measures in the highly vulnerable region of Western Ghats, the State requested a grant of Rs.10,000 crore.
According to him, the 15th Finance Commission’s award reduced Karnataka’s share sharply from 4.713 to 3.647. This has led to a loss of Rs. 68,275 crore during the five-year period from 2021-26, he said.
The Finance Commission was conscious of the drastic cut Karnataka received and recommended state specific grants of Rs.11,495 crore, the Chief Minister said, adding, the Government of India, however, has not accepted the recommendation.
"So, Karnataka was deprived of these grants as well. The total of all the losses amount to Rs 79,770 Crores during the 15th Finance Commission period,", Siddaramaiah said.
Karnataka, he said, has seen a revenue transfer of Rs 35,000-40,000 crore per year to other States, amounting to 1.8 percent of its GSDP, during the 15th Finance Commission period.
"The figure is astounding because the net transfers outside of Karnataka amount to about 50 to 55 percent of the total revenues it generates."
Let the Truth be known. If you read VB and like VB, please be a VB Supporter and Help us deliver the Truth to one and all.
Two injuries, one DNF, a DQ as India end messy World Relays campaign
Gaborone (Botswana) (PTI): Amoj Jacob and Ragul Kumar got injured during the men's 4x400m and 4x100 races respectively as India ended their World Athletics Relays campaign in disappointment on the second day of competitions here on Sunday.
The Indian camp had high hopes of making the 2027 World Championships in the men's 4x400m relay but the team did not finish (DNF) the race as Jacob suffered cramps and pulled out of the race after taking the baton from the first leg runner Dharamveer Choudhary. Rajesh Ramesh and Vishal TK were to run in the third and fourth legs.
Those teams which could not qualify for the 2027 Beijing World Championships by reaching the final round of each of the six relay events on Saturday were given another chance in the second qualification round on Sunday.
The top two teams in each of the two heats (in all six relay events) booked the Beijing ticket on Sunday.
India will now have to try and qualify for the World Championships through the Top Lists of the World Athletics, which is a long and tedious process.
In the men's 4x100m race, third leg runner Ragul Kumar fell down the track after failing to hand over the baton inside the exchange zone to fourth leg runner Gurindervir Singh, which clearly showed the lack of coordination among the runners.
Harsh Santosh Raut and Animesh Kujur ran the first two legs.
The Indian quartet was disqualified and Kumar was seen being taken away from the Field of Play with the help of the volunteers.
It was a comedy of errors in the case of the women's 4x100m race, which saw the baton being dropped during an exchange between first leg runner Tamanna and second runner Nithya Gandhe, though the Indians finished the race in 53.09 seconds.
Gandhe started running quite a distance, but after realising that the baton was not in her hand, she turned and ran back to pick it up.
The only silver-lining for the Indian contingent was the national record time in the mixed 4x100m relay race, though the quartet of Ragul Kumar, Nithya Gandhe, Animesh Kujur and Sneha SS finished sixth in heat number two with a time of 41.35 seconds, bettering the previous national mark of 42.30 seconds set in March in Chandigarh.
The mixed 4x400m relay quartet of Theerthesh P Shetty, Kumari Saloni, Nihal William and Rashdeep Kaur ended at fifth in heat number one with a time of 3 minutes and 19.40 seconds.
On Saturday, all the five Indian relay teams had failed to make it to the respective final rounds and thus missed out on the 2027 World Championships berths.
