Maharashtra’s Fiscal Discipline and Contribution to Economic Growth is Commendable: Dr. Arvind Panagariya, Chairman, 16th Finance Commission

Commission, praised Maharashtra for its exemplary fiscal discipline and significant contribution to the country’s economic growth. A meeting of the 16th Finance Commission was held at Sahyadri Guest House, Mumbai.

Chief Minister Devendra Fadnavis, Deputy Chief Minister and Minister for Finance, Planning and State Excise Ajit Pawar, and Deputy Chief Minister Eknath Shinde welcomed the Commission Chairman Dr. Arvind Panagariya, and members Dr. Manoj Panda and Dr. Soumya Kanti Ghosh.

On behalf of the Maharashtra government, Chief Minister Devendra Fadnavis submitted a memorandum to the Commission, outlining various suggestions and demands as per the Commission’s terms of reference.

The Maharashtra government has requested an increase in the vertical devolution of central taxes from 41% to 50%. The state has also proposed that cesses and surcharges be merged with core taxes and that non-tax revenues of the central government be included in the divisible pool.

For horizontal devolution, the state has suggested new criteria including ‘Sustainable Development and Green Energy’ and ‘States’ Incremental Contribution to India’s GDP’. Additionally, the state has requested a reduction in the Income Distance Criteria from 45% to 37.5%.

Demand for Special Grant of ₹1,28,231 Crore

Under special grants, Maharashtra has sought ₹1,28,231 crore for the implementation of the Mumbai Metropolitan Region’s economic master plan, interlinking of rivers, a new high court complex, prison infrastructure, postgraduate hostels for medical students, and eco-tourism projects. The state also urged the Commission to recommend revenue deficit grants.

Increased Allocation for SDRF and Local Bodies

The state has demanded an increase in the total allocation under the State Disaster Response Fund (SDRF) and a revision of the center-state funding ratio from 75:25 to 90:10.

Further, the state proposed that grants to local self-government institutions be increased from 4.23% to 5% of the divisible pool, and that these funds be distributed based on the ratio of rural to urban population. It also called for separate grants for public bus transport and fire services in cities and municipal corporations.

During the meeting, the Finance Commission also held discussions with representatives from the business and industry sectors, local self-government bodies, and political parties.