To increase Maharashtra’s share in the receipt of tax income, the State Government on Thursday (May 9, 2025) beneficial to the 16th Finance Commission (FC) to elevate the weightage of inhabitants share in devolution system from 15% to 20%, together with a request for allocation of ₹1,28,231 crore for the infrastructure improvement in the Mumbai Metropolitan Region (MMR).
These projects embrace interlinking of rivers, hostel necessities of post-graduate medical college students, jail upgradation and a brand new Bombay High Court advanced and proposed for the general allocation underneath the State Disaster Response Fund (SDRF), altering the ratio between the Centre and State from 75:25 to 90:10. Also elevate the grant-in-aid for native our bodies from 4.23% to 5%.
Hailing Maharashtra’s fiscal coverage, sixteenth FC, chairman, Dr. Arvind Panagariya stated, “The State’s finances appear to be in good state with low fiscal deficit and borrowings within the limit of 3% set by the Centre. The State has asked to increase population share in the horizontal devolution formula to 20%, making clear allocations of 10% for urban fund devolution and 10% for fund devolution.”
According to the Chief Minister Office assertion, Maharashtra requested to increase the vertical devolution in the divisible tax pool from the prevailing 41% to 50%, comparable to different States’ necessities. The divisible pool consists of tax income shared among the many Central Government and State Governments in a rustic, based mostly on a report ready by the Finance Commission.
These suggestions have been made throughout a gathering with the 16th Financial Commission, headed by Mr. Panagariya, who’s at the moment on a two-day go to to Maharashtra to put together a report on the State’s monetary necessities and seek the advice of specialists in regards to the fund allocation for the projects. The assembly was a component of consultations with all of the States of India to finalise suggestions for the distribution of tax revenues for the 5 years ranging from 2026. Along with Deputy Chief Minister (DCM) Ajit Pawar and Eknath Shinde, Chief Minister Devendra Fadnavis represented the State throughout the sixteenth FC assembly on Thursday (May 8, 2025.)
Other suggestions
Maharashtra Government has urged FC to introduce the brand new standards for horizontal devolution — Sustainable improvement and inexperienced vitality, giving weightage of 22.5% and a couple of.5% weightage for the State implementable contribution to India’s Gross Domestic Product (GDP). Besides, the State insisted on decreasing the ‘ Income distance’ to 37.5%. Income distance means the gap of a State’s earnings from the State with the best per capita earnings; the decrease the earnings, the upper the share, whereas decreasing ‘Demographic performance’ from the prevailing 12.5% to 10%.
Horizontal devolution facilitates the allocation of Central taxes among the many States based mostly on assigned weights and standards. The 15th FC had six standards for horizontal devolution, together with earnings distance, inhabitants, space, forest and ecology, demographic efficiency, and tax effort.. The Government goals to obtain excessive allocations to develop infrastructure and improve public companies.
Published – May 09, 2025 12:45 pm IST
