LUCKNOW: Uttar Pradesh has demanded 50% share in central taxes, 16th Finance Commission Chairman Arvind Panagariya revealed here on Wednesday.
While interacting with media persons after the meeting CM Yogi Adityanath and with state government officials, Panagariya shared details saying that the CM had submitted a memorandum urging the Centre to raise Uttar Pradesh’s share in central taxes from 41% to 50%.
“The state has also sought a special DDA fund for targeted development schemes. The UP government presented its reform initiatives which were appreciated by the Commission. It also gave proposals to revise the weightage of key devolution criteria,” he said.
Further elaborating on Uttar Pradesh’s key demands, Panagariya said the state had proposed changes to the devolution formula—suggesting a reduction in the weightage for income distance (from 45% to 30%), geographical area (15% to 10%), demographic performance (12.5% to 7.5%), and forest cover (10% to 5%), while seeking increases in the weightage for population (15% to 22.5%) and tax collection effort (2.5% to 10%).
The Chairman also explained that the main job of the Commission was to prepare a proposal for dividing taxes between the central government and the states.
“The proposal is then presented to the President of India,” he said.
Panagariya mentioned the 15th Finance Commission’s recommendations for horizontal devolution as population 15 per cent, area 15 per cent, forest 10 per cent, tax effort 2.5 per cent, and demographic performance 12.5 per cent.
He added that the previous Commission gave the highest weightage of 45 per cent to the income distance criterion.
All praise for UP as a well-governed state, Panagriya said that Uttar Pradesh's tax collection was in proportion to GSDP which was the highest in the country.
He also noted that Uttar Pradesh’s fiscal deficit was within normal limits and its debt-to-GDP ratio was also within manageable levels. He further said that in the last Finance Commission, 41 per cent of tax revenue was shared with the states and 59 per cent remained with the central government.