Lok Sabha Question No. 3723 (UNSTARRED), answered on 2025-03-24
Subject: Fiscal Inequities in State-Central Tax Revenue Distribution
Ministry: FINANCE
Asked by: Thiru Dr. S Jagathratchakan

## GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF ECONOMIC AFFAIRS

## LOK SABHA UN-STARRED QUESTION NO. 3723

TO BE ANSWERED ON MONDAY, THE 24 th  MARCH, 2025 CHAITRA 3, 1947 (SAKA)

## Fiscal Inequities in State-Central Tax Revenue Distribution

## 3723. Shri S Jagathratchakan:

Will the Minister of FINANCE be pleased to state:

(a) the details of the reduction of Government share of tax revenue allocated to States, particularly Tamil Nadu that contribute significantly to the nation's GDP and the details of the reduction in the percentage of share to States, State-wise;

(b) the steps taken by the Government to address the disproportionate burden on States  caused  by  underfunded  Centrally  Sponsored  Schemes  and  disaster management; and

(c)  whether  the  Government  considers  to  increase  the  States'  share  in  central taxes to 50% as demanded by Tamil Nadu to ensure equitable fiscal federalism and balanced development?

## ANSWER

## THE MINISTER OF STATE IN THE MINISTRY OF FINANCE (SHRI PANKAJ CHAUDHARY)

(a  to  c): According  to  Article 280(3)(a)  of  the  Constitution,  the  Finance Commission  has  the  mandate  to  make  recommendations  on  the  distribution between the Union and the States of the net proceeds of taxes and the allocation between the States of the respective shares of such proceeds. In this regard, it may be noted that inter-se share of Tamil Nadu in the net proceeds of the taxes was  increased  in  the  final  report  of  15 th Finance  Commission  to  4.079%  as compared to 4.023% during 14 th Finance Commission. Details showing inter-se share  of  States  in  the  net  proceeds  of  the  taxes  (divisible  pool)  is  given  at Annexure 1.

Resource assessment of Union and States is done by the Finance Commission. It  is  in  the  process of  consulting all  stakeholders. Every State has the right to make  its  representation  to  the  Finance  Commission.  Further,  the  centrally sponsored schemes and financing of disaster management is jointly financed by the Union and State Governments.

## Statement showing Inter-se

Annexure 1 share of States in the net proceeds of the taxes

| State             | Share (%) (15 th FC Final report) [FY 2021-22 to FY 2025-26]   |   Share (%) (14 th FC report) [FY 2015-16 to FY 2019-20] |
|-------------------|----------------------------------------------------------------|----------------------------------------------------------|
| Andhra Pradesh    | 4.047                                                          |                                                    4.305 |
| Arunachal Pradesh | 1.757                                                          |                                                    1.37  |
| Assam             | 3.128                                                          |                                                    3.311 |
| Bihar             | 10.058                                                         |                                                    9.665 |
| Chhattisgarh      | 3.407                                                          |                                                    3.08  |
| Goa               | 0.386                                                          |                                                    0.378 |
| Gujarat           | 3.478                                                          |                                                    3.084 |
| Haryana           | 1.093                                                          |                                                    1.084 |
| Himachal Pradesh  | 0.830                                                          |                                                    0.713 |
| Jharkhand         | 3.307                                                          |                                                    3.139 |
| Karnataka         | 3.647                                                          |                                                    4.713 |
| Kerala            | 1.925                                                          |                                                    2.5   |
| Madhya Pradesh    | 7.850                                                          |                                                    7.548 |
| Maharashtra       | 6.317                                                          |                                                    5.521 |
| Manipur           | 0.716                                                          |                                                    0.617 |
| Meghalaya         | 0.767                                                          |                                                    0.642 |
| Mizoram           | 0.500                                                          |                                                    0.46  |
| Nagaland          | 0.569                                                          |                                                    0.498 |
| Odisha            | 4.528                                                          |                                                    4.642 |
| Punjab            | 1.807                                                          |                                                    1.577 |
| Rajasthan         | 6.026                                                          |                                                    5.495 |
| Sikkim            | 0.388                                                          |                                                    0.367 |
| Tamil Nadu        | 4.079                                                          |                                                    4.023 |
| Telangana         | 2.102                                                          |                                                    2.437 |
| Tripura           | 0.708                                                          |                                                    0.642 |
| Uttar Pradesh     | 17.939                                                         |                                                   17.959 |
| Uttarakhand       | 1.118                                                          |                                                    1.052 |
| West Bengal       | 7.523                                                          |                                                    7.324 |
| Jammu &Kashmir *  | -                                                              |                                                    1.854 |
| Total             | 100.00                                                         |                                                  100     |