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Despite 5 confederate States being assigned a collectively higher stock nether the vertical organisation strategy of the 16th Finance Commission (FC) than successful the past, Tamil Nadu’s stock has seen lone a marginal rise.
The stock of Tamil Nadu, which was 4.079% successful the 15th FC, roseate to 4.097% now, accounting for a complaint of summation of 0.44%. This was followed by Telangana with a emergence of 3.43% and Andhra Pradesh with 4.2%. Only Karnataka and Kerala person witnessed a double-digit complaint of summation — 13.27% and 23.74%. At the all-India level, Kerala’s grade of emergence is lone adjacent to Haryana’s 24.52%, portion the 3rd slot goes to Karnataka.
‘Virtually nothing’
Veteran experts successful nationalist finances accidental Tamil Nadu has got virtually thing extra. “Yet again, unfair treatment” is the refrain of the analysts. One of the experts contends that the 16th FC included publication to Gross Domestic Product (GDP) arsenic 1 of the criteria for horizontal devolution. But for this category, Tamil Nadu’s stock whitethorn person gone down. The criterion of taxation and fiscal efforts has been removed, portion the weights assigned to the criteria of area, demographic show and per-capita Gross State Domestic Product (GSDP). Only the criterion of colonisation has seen an summation successful value from 15% to 17.5%, which, however, does not payment the confederate States including Tamil Nadu and Kerala.
K.R. Shanmugam, erstwhile Director of the Madras School of Economics, says the emergence successful the vertical devolution for the southbound seems to person been achieved by decreasing the stock of six bluish States specified arsenic Uttar Pradesh, Madhya Pradesh and Bihar, too West Bengal. The combined stock of the 7 States, which stood astatine 51.20%, has been brought down to 49.93%.
Pointing retired lone alleviation and impermanent restoration works are covered nether catastrophe effect money schemes, a seasoned policymaker suggests that the Union authorities follows the illustration of the Tamil Nadu government, which had created successful the aftermath of the December 2015 floods successful Chennai and surrounding areas, a task mentation money of ₹100 crore for the formulation of projects to beryllium posed to backing agencies. Such a money would beryllium utile to the States that acquisition earthy disasters frequently.
The 16th FC has dealt elaborately with the taxable of subsidies, an country wherever the southbound has been a trendsetter. “At ₹78,453 crore, Tamil Nadu had the highest implicit level of subsidy successful 2023‑24, followed by Karnataka, Andhra Pradesh and Telangana astatine ₹70,149 crore, ₹63,951 crore and ₹62,847 crore respectively,” the sheet records. Pointing retired that the implicit subsidy levels are “somewhat misleading” fixed the State’s size, the Commission names Telangana arsenic 1 of the States wherein subsidy levels, arsenic a proportionality of respective GSDP, exceeded 5% during 2024-26, and Andhra Pradesh having the subsidy level lasting betwixt 3% and 5%.
As for channelising subsidies to the eligible beneficiaries, the FC study refers to measures taken by Andhra Pradesh, Telangana and Tamil Nadu governments. It acknowledges that by employing accusation exertion (IT) enabled information investigation connected integrated databases, specified States person been capable to de-duplicate and streamline beneficiary listing, starring to important savings.
Even though the confederate States had taken a akin basal connected galore issues, they differed among themselves implicit gross shortage grants, meant for bridging the gross gap. While Karnataka expressed scepticism, Andhra Pradesh, Kerala and Tamil Nadu wanted the continuation of these grants. However, the 16th FC’s proposal was against the grants.
16th Finance Commission study tabled, states’ taxation stock retained astatine 41%
The Centre’s determination to clasp States’ stock successful the communal excavation of taxes astatine 41% for 2026–31 has sparked disapproval from absorption leaders. Finance Minister Nirmala Sitharaman tabled the Sixteenth Finance Commission study successful the Lok Sabha connected February 1, 2026, mounting the model for taxation devolution betwixt the Centre and States. Several States, including Karnataka and Kerala, had sought a higher 50% share, citing rising fiscal responsibilities. | Video Credit: The Hindu
