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**Summary:**

Karnataka Chief Minister Siddaramaiah met with Union Finance Minister Nirmala Sitharaman to advocate for a pro-growth approach in tax devolution by the 16th Finance Commission. He highlighted Karnataka’s developmental challenges, particularly in Bengaluru, Kalyana Karnataka, and the Malnad region, requesting special grants. He argued that Karnataka has suffered financially under the 15th Finance Commission, citing a reduced share in tax devolution and the lack of allocated special grants. The state proposes a reduction in the weightage given to income distance, reallocating it to fiscal contribution, and the redistribution of revenue deficit grants across all states using the horizontal devolution formula.

**News Article:**

**Karnataka CM Seeks Fairer Tax Devolution from Centre, Cites Developmental Needs**

**Bengaluru, June 24, 2025** – Karnataka Chief Minister Siddaramaiah has urged the Union government to adopt a pro-growth approach to tax devolution, arguing that the current system disadvantages the state. During a meeting with Union Finance Minister Nirmala Sitharaman in New Delhi on Tuesday, Siddaramaiah presented a case for increased financial support to address the unique developmental challenges facing Karnataka.

The Chief Minister emphasized the urgent need for investment in Bengaluru’s infrastructure (amounting to ₹1.15 lakh crore), as well as special grants for the flood-affected Malnad region and the under-developed Kalyana Karnataka area, which falls under Article 371 J, providing special status.

Siddaramaiah claimed that Karnataka suffered a loss of ₹80,000 crore during the 15th Finance Commission period, with its share in tax devolution dropping significantly from 4.713% to 3.647%. He criticized the heavy reliance on the “income distance” criterion, which received a 45% weightage, contributing to the financial shortfall.

“We have requested the 16th FC that the weightage for income distance should be reduced by 20 percentage points and reallocated to fiscal contribution, which is the State’s share in the national GDP,” stated the Chief Minister. He highlighted that Karnataka contributes 8.7% to the national GDP, the third-highest in the country, and is second in GST collection, underscoring its significant contribution to the national economy.

The Karnataka government has also called for the discontinuation of Revenue Deficit Grants in their current format, deeming them detrimental to fiscal discipline. Instead, it proposes that the allocated funds be redistributed among all states using the horizontal devolution formula.

“Deficit grants have been given to Kerala and Tamil Nadu also. Give it to all States or remove it,” Siddaramaiah added.

The Chief Minister said his meeting with the Finance Minister follows an earlier engagement with the 16th Finance Commission. He said an additional memorandum has been submitted. The state government hopes these proposals will lead to a more equitable and growth-oriented approach to tax devolution in the future.

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