Share of tax devolution for the Southern States declining: Telangana FM

Telangana Finance Minister and Deputy Chief Minister Mallu Bhatti Vikramarka has found fault with the Central allocation formula, saying that the Southern States deserve more. Pitching for a shift in fund allocation paradigm, he wanted the Commission to incentivise the States that were performing well.

“We have expressed concern over the declining share of tax devolution for Southern States, including Telangana,” he said.

“We need to move away from the current ‘Per Capita Income Distance’ criterion. Instead, we suggest assigning 50 per cent weightage to GSDP to ensure a more equitable allocation of resources for states driving national economic growth,” he said.

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Presenting the State’s Budget for 2025-26 in the Assembly on Thursday, he briefed the House about the State’s stand on the devolution of funds by the Centre.

“We asked the Commission for a fair share of central tax distribution for states. Additionally, it has requested greater financial assistance for debt stability, infrastructure development, and social welfare programmes,” he said.

“We also wanted the Centre to increase the tax devolution component to 50 per cent from the present level of 41 per cent. We also pointed out to the Commission that the Cess and additional charges imposed by the Centre have significantly reduced the revenue allocated to States,” he said.

Besides, the State is also worried about the decreasing trend of tax devolution for the Southern States. “Under the 14th Finance Commission, Telangana received 2.437 per cent of funds, which declined to 2.102 per cent under the 15th Finance Commission. The allocation of fewer funds to well-performing States is unfair. We advocate for a more rational tax distribution system that incentivises States that are contributing significantly to the nation’s economic growth,” he said.