16th Finance Commission members to visit Karnataka; govt. to seek a greater share in devolution of funds to correct ‘injustice’

Karnataka seeks fair share of funds from 16th Finance Commission to correct previous "injustice" and boost state economy.

As the Chairman and members of the 16th Finance Commission are expected to visit Karnataka this month-end, Chief Minister Siddaramaiah on Friday held a preliminary discussion with officials of the State Finance Department and Chief Minister’s economic adviser Basavaraj Rayaraddi, MLA, to work out a plan to seek more funds and correct the “injustice” done to the State in the 15th Finance Commission.

The 16th Finance Commission, headed by Arvind Panagariya, economist, is expected to make its recommendations by October 31, 2025, covering an award period of five years commencing April 1, 2026. Sources told The Hindu that members of the commission would visit the State on August 29 for discussions on devolution of funds from the Centre to the State.

The Congress government has maintained that the State’s share declined from 4.71% in the 14th Finance Commission to 3.64% in the 15th Finance Commission, a decline of 1.07 percentage points. Earlier, Mr. Siddaramaiah termed as “unfair” the 15th Finance Commission’s report to Karnataka and said the State lost its share in the devolution of taxes to the extent of 1%, which has resulted in a loss of ₹1,80,000 crore over the period of five years.

After Maharashtra, Karnataka ranks second in the collection of taxes and the State contributes ₹4.3 lakh crore a year from all types of taxes, but in turn, the State has been receiving only 12% to 13% of its share from the Centre, the Chief Minister said.

The State’s share only in the Centre’s devolution of taxes declined from 2.2% to 1.23% from 2017–18 to 2024–25, the Chief Minister had said. The State is expected to place its demand before the 16th Finance Commission for a share in the collection of cess on petrol and diesel and collection of surcharge from the State.