Lucknow — In a key interaction with the media, 16th Finance Commission Chairman Arvind Panagariya acknowledged Uttar Pradesh as a “very well-governed state” and confirmed that the state government has formally demanded an increase in its share of central taxes from the current 41% to 50%.
Speaking at a press conference alongside other Commission members, Panagariya highlighted the meeting held earlier with Chief Minister Yogi Adityanath. During the meeting, the CM submitted a memorandum outlining the state’s financial priorities, including a proposal for a special development fund to support region-specific schemes.
Panagariya commended the state’s initiatives for economic reform and infrastructure development. He noted that Uttar Pradesh’s tax collection is aligned with its Gross State Domestic Product (GSDP) and ranks among the highest in India. “UP’s fiscal deficit remains within permissible limits, and its debt-to-GDP ratio is well-managed,” he added.
The state also proposed revised criteria for tax devolution:
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Income distance: 45%
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Geographical area: reduced from 15% to 10%
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Population: increased from 15% to 22.5%
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Demographic performance: reduced from 12.5% to 7.5%
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Forest cover: reduced from 10% to 5%
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Tax effort: increased from 2.5% to 10%
Currently, under the 15th Finance Commission’s recommendations, 41% of the divisible pool of central taxes is allocated to states and 59% to the Centre. Uttar Pradesh now seeks a significant revision to this ratio in the 16th Finance Commission’s upcoming report, aiming for greater fiscal autonomy and more resources for development.
