Telangana Chief Minister A. Revanth Reddy on Tuesday called on the 16th Finance Commission to boost the share of states in central taxes from the current 41 per cent to 50 per cent.
Speaking at a meeting with Commission Chairman Arvind Panagariya and members, CM Reddy highlighted Telangana's debt, which has surged to over Rs 6.85 lakh crore by the end of the last financial year. He asked the Commission to either restructure the debt or provide additional assistance, as a significant portion of revenue is devoted to repaying loans.
“I strongly place my demand and speak for all states on this increase of central fund allocation from 41 per cent to 50 per cent,” Reddy said. “If you can do this, I will take on the huge responsibility of supporting Hon'ble Prime Minister Shri Narendra Modi's vision to make India a USD 5 trillion economy.”
Deputy Chief Minister Bhatti Vikramarka, responsible for finance, also addressed the Commission, urging it to grant states greater autonomy in tailoring centrally-sponsored schemes (CSS) to their specific needs.
“We propose increasing the share of states in central taxes from 41 per cent to 50 per cent,” he said. “Over the years, cesses and surcharges not shared with states have diminished their share of total gross tax revenue.”
Bhatti argued that increasing vertical devolution would provide states with the fiscal space necessary to enhance welfare programmes, address infrastructure gaps, and prioritise local development.
He also urged the Commission to reconsider using per capita income distance as the primary indicator for horizontal devolution, suggesting instead a 50 per cent weightage on Gross State Domestic Product (GSDP) contribution.
“A greater weight on GSDP would incentivise states to adopt reforms that improve productivity, attract investment, and create jobs, ultimately benefiting the national economy,” Bhatti added. “This approach would make states more competitive and help reduce regional disparities, encouraging more balanced growth across the country.”
The Chief Minister also called for the Commission to recognise certain expenditures, such as Rythu Bharosa, farm loan waivers, and food subsidies, as essential investments rather than “freebies.”
The 16th Finance Commission, led by Chairman Arvind Panagariya, has been meeting with various political parties, local body representatives, and industry chambers during its visit to Telangana.
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