Jharkhand govt urges Finance Commission to raise vertical devolution of central taxes to 50 pc

Ranchi, May 30 (PTI) The Jharkhand government on Friday appealed to the Sixteenth Finance Commission to raise the vertical devolution of central taxes from the existing 41 per cent to 50 per cent.

A Finance Commission team, headed by its chairman Dr Arvind Panagariya, held discussions with the state government. Jharkhand Finance Minister Radhakrishna Kishore and Chief Secretary Alka Tiwari were present at the meeting.

"Jharkhand's recommendation is to increase vertical devolution to 50 per cent from 41 per cent and then 50 per cent will be left to the central government. This is a recommendation that the majority of the states have made. They have all pitched for raising the share of the states," Panagariya said while addressing the media here.

The state also gave us its preferences on how horizontal devolution should be done, he said, adding it has suggested a new criteria which is very "creative and interesting".

"It is argued very forcefully that introduction of GST has led to a loss of tax revenue for Jharkhand because it is largely a producing state rather than consuming state. It has pitched for introduction of this new variable to compensate for the loss of tax revenue," the commission's chairman said, adding that no such criteria was used in the past by any Finance Commission.

Panagariya said the state also gave its preferences on how horizontal devolution should be in comparison to 15th Finance Commission's recommendations that are currently in force during the 2025-2026 fiscal.

"That is a measuring rod against which we can talk about what the suggestions of the Jharkhand government are. On horizontal devolution, Jharkhand's recommendation is population weight should be increased to 17.5 per cent from 15 per cent by the 15th Finance Commission. It has demanded that income distance weight be raised to 50 per cent from the present 45 per cent," he said.

He said that the demand has been made keeping in view the low per capita income in Jharkhand which ranks the third lowest in the country after Uttar Pradesh and Bihar.

The commission held a series of meetings with representatives from local bodies, trade organisations, industry associations, chambers of commerce, and political parties.

The Finance Commission team on Thursday visited the temple town of Deoghar and offered obeisance at the Baba Baidyanath temple.

The panel also held discussions with representatives of Panchayati Raj Institutions and administrators of urban local bodies from all six districts of the Santhal Pargana region.

The delegation had arrived in Ranchi on Wednesday on a four-day visit to Jharkhand and met Chief Minister Hemant Soren.

The CM sought support from the Finance Commission for the all-around development of various sectors and communities in the state.

"Jharkhand contributes significantly to the country's development as a state with extensive mining activities. But, it also faces consequences, such as environmental degradation, displacement of people, and loss of land. The land reclamation work by central mining companies is not being carried out in a planned manner," Soren told the commission members.

He also sought autonomy to utilise financial resources according to the needs of the local population, as each state has different requirements.

The Centre's vision of 'Viksit Bharat' could be realised through the development of states and villages, Soren said.

"A large population of the state depends on agriculture. So, agriculture and allied activities are a focus area for the government. Jharkhand has significant potential in the farming sector," he added.

There is a need for special efforts in priority areas such as health, education, and livelihoods, Soren said.

The team is scheduled to return to Delhi on May 31.

Jharkhand has prepared a Rs 1.45 lakh-crore budget for the ongoing fiscal, with a whopping Rs 62,844 crore earmarked for social welfare programmes to help the poor, women and other vulnerable groups.

For its popular Jharkhand Mukhyamantri Maiya Samman Yojana, which aims to enhance the financial security and well-being of women in the age bracket of 18-50 years, it allocated Rs 13,363 crore.

Besides, Rs 5,000 crore has been allocated towards providing free electricity.

Last month, the chief minister called for a provision in the Coal Bearing Areas (Acquisition and Development) (CBA) Act, requiring companies to return land to the state government after mining activities.

The CM also demanded the release of Rs 1.4 lakh crore, owed by mining companies, at the recent NITI Aayog Governing Council meeting chaired by Prime Minister Narendra Modi. PTI NAM BDC ACD