Karnataka has requested the 16th Finance Commission to revise the unequal funding formula and recover a higher share of central tax revenue, arguing that the existing norms have financially disadvantaged the state despite its strong economic contribution.
K’taka seeks higher tax share from 16th Finance CommissionIn a statement, Chief Minister Siddaramaiah said the state government has placed “fair and constitutional demands” before the commission on behalf of the people of Karnataka, including a fair tax devolution, enhanced disaster relief fund and special grants.
“Karnataka insists that a strong federal structure can be upheld only through equitable distribution,” he said, appealing to media houses to support a public campaign titled “Kannadigas’ Struggle for Justice”.
The state claims that its share of central tax devolution has come down sharply after the 15th Finance Commission. According to the statement, Karnataka’s share has come down from 4.71% under the 14th Commission to 3.64% under the 15th Commission, which the government says has resulted in a loss of approx. ₹80,000 crores.
“If the states were divided ₹Karnataka got 100 before ₹4.71. The 15th Commission brought it down ₹3.64, causing grave injustice,” Siddaramaiah said. He added that Karnataka, despite being the “driver of the country’s economic power” and leading in per capita productivity, receives the lowest central tax share and grants compared to its contribution.
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The state has asked to restore its previous share of 4.71%, saying any higher allocation would more accurately reflect equity.
State Dr. for the infrastructure of Bangalore ₹1.15 lakh crore would be required over five years and asked the commission to recommend at least ₹27,793 crores.
Siddaramaiah called for states’ share of central taxes to be increased from 41% to 50% and cesses and surcharges to be capped at 5% of central revenue, with the rest to be shared with states. He said, this is my appeal on behalf of all the citizens of Karnataka.
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A key objection relates to the weight given to the “income distance” formula. “Per capita income is only one measure, not the only indicator, of an economy,” the statement said, adding that average income masks inequality. Citing the trend of global inequality, the Chief Minister said that concentration of wealth among a small segment should not penalize states with higher average incomes. Karnataka has demanded a reduction in the weightage of income distance from 45% to 25%.
The government also criticized the change in gross state domestic product base year from 2004-05 to 2011-12, saying it overstated Karnataka’s growth due to the Bengaluru-centric IT boom. “Due to base year change, Karnataka’s GSDP growth has been inflated by 33%, while the average growth of other states was calculated at 5.6%. This has resulted in injustice,” the statement said, calling for a more realistic assessment.
Karnataka further objected to the use of 2011 population data instead of 1971 figures, saying that controlled population growth was effectively penalized. “Instead of encouraging population control, a severe penalty was imposed,” Siddaramaiah said, calling for a return to the 1971 benchmark and a scientific reassessment of population weights.
The state has demanded a scientific recalculation of allocations under the National and State Disaster Response Funds, with Karnataka facing losses ₹1.56 lakh crore from natural calamities between 2018 and 2024. Despite repeated floods, droughts and extreme rainfall since 2002, the state said it had only identified five risk factors and asked to raise it to 15.
Siddaramaiah also sought incentives for states that have advanced decentralization, proposing a revised formula that gives 60% to population, 20% to geographic area and 20% to a devolution index.
For Kalyan Karnataka Region, the State has allotted ₹25,000 crore over five years and requests for grants from the Centre, with a ₹10,000 crore special package for environment protection and disaster management.
Special grants were sought for ecologically sensitive Malnad, Coastal and Western Ghats regions as well as assistance for irrigation in dry land areas.
