Bengal Government Proposes Increasing Tax Devolution to States from 41% to 50%

The West Bengal government has requested the Sixteenth Finance Commission to increase the tax devolution to states from 41% to 50%. This plea was made during a meeting with the commission's chairman, Arvind Panagariya. Most of the 13 states visited by the commission have also sought a rise to 50%, while others suggested an increase to 45%.

Proposed Changes in Allocation Criteria

West Bengal has proposed introducing a new urbanisation-based weightage of 7.5% in the horizontal allocation criteria. They also suggested removing forest and ecology as a criterion, which previously held a 10% weightage. Additionally, the state recommended adjusting population weightage to 10%, considering Scheduled Caste and Scheduled Tribe demographics.

Chief Minister Mamata Banerjee highlighted fiscal challenges and advocated for increasing income criteria weightage from 45% to 50%. She argued that this would address income disparities across states and benefit resource-poor regions like West Bengal. The state also proposed raising the area criterion weightage to 20% from 15%.

Concerns Over Central Schemes

During her address, Banerjee expressed concerns about alleged deprivation of funds for centrally sponsored schemes. She criticised restrictions on branding these schemes, despite states funding 40%, and opposed direct fund transfers to panchayats, citing disruptions in state administrative efficiency.

The Congress party supported West Bengal's demands, suggesting a 50% share of central tax for states and increased allocations for education. They also called for simplifying GST and income tax systems. The CPIM backed these demands, urging more funds under grants-in-aid for states with lower SGDP.

Addressing Regional Imbalances

The CPIM memorandum emphasised addressing regional imbalances by increasing funds for states with declining primary and secondary sector shares. They highlighted unresolved issues in central schemes like MGNREGA and Awas Yojana, affecting people in the state.

Natural disasters like cyclones and river course changes have impacted West Bengal. The CPIM urged the commission to review disaster management financing arrangements. Areas like Sundarbans face erosion, while Malda and Murshidabad deal with Ganga's changing course, leaving many homeless.

The Finance Commission is responsible for recommending tax revenue distribution between the Centre and states. Panagariya assured that all submissions would be evaluated after consulting all 28 states until mid-May. The chief minister's proposals aim for greater fiscal autonomy amid rising welfare expenditures and development challenges.