- By Kamakshi Bishnoi
- Thu, 05 Jun 2025 12:34 PM (IST)
- Source:JND
The Yogi Adityanath-led Uttar Pradesh government has submitted a formal request to the 16th Finance Commission, urging an increase in the states’ share of central taxes from the existing 41 per cent to 50 per cent.
Chief Minister Yogi Adityanath presented a detailed demand letter during a meeting with the commission at Lok Bhavan on Wednesday. He also emphasised the need for separate funds to support special development schemes in the state.
Commission Chairman Arvind Panagariya, addressing a press conference after the meeting, revealed that nearly 22–23 out of 28 states have made similar demands. However, he noted that a 50 per cent share is a significant increase, and the commission will carefully evaluate the proposal before making its final recommendations, which will cover the period from FY 2026–27 to FY 2030–31.
During the meeting, CM Adityanath outlined Uttar Pradesh’s development initiatives and financial management, highlighting the state's expectations from the Finance Commission. Additional Chief Secretary (Finance) Deepak Kumar also presented a comprehensive report detailing the state’s improved fiscal position. The state's fiscal deficit currently stands at around 3 per cent, and previous revenue challenges have been effectively addressed.
Panagariya praised Uttar Pradesh for its financial discipline, stating that despite having the second-lowest per capita income in the country—just above Bihar—the state has emerged as one of the best-managed in terms of fiscal health.
He lauded UP’s tax collection ratio relative to its Gross State Domestic Product (GSDP), calling it the highest in the country. He added that other states should take inspiration from UP's tax collection efficiency and budgetary discipline.
Key Demands and Proposals by UP Government:
Change in Tax Devolution Formula:
-Maintain 45 per cent weightage for income distance (based on per capita GSDP)
-Reduce geographical area weightage from 15 per cent to 10 per cent
-Increase population weightage from 15 per cent to 22.5 per cent
-Decrease demographic performance weightage from 12.5 per cent to 7.5 per cent
-Reduce forest and ecology weightage from 10 per cent to 5 per cent
-Increase own tax revenue criterion from 2.5 per cent to 10 per cent
Grant Assistance Demands:
-Infrastructure funding for the State Capital Region
-Construction of Utsav Bhawan at the gram, block, and district panchayat levels
-Auditoriums and other facilities at block headquarters
-Support for 12 major tourism circuits including Ramayana, Mahabharata, and Buddhist Circuits
-Funds for the Kashi–Prayagraj–Ayodhya Spiritual Circuit
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-Shift disaster relief focus to prevention, preparedness, and rescue, with an increased share of 25 per cent for state-declared disasters
-Proposal to revise the State Disaster Risk Management Fund ratio to 90:10 (Centre:State)
-Assistance for developing industrial corridors across districts
-Establishment of CM Model Schools in each block and panchayat, equipped with smart classes, libraries, ICT labs, robotics, and playgrounds
If the demand for a 50 per cent share in central taxes is accepted, Uttar Pradesh could see a substantial increase in revenue. Based on current estimates for the 2025–26 fiscal year, the state expects Rs 2.55 lakh crore from central taxes. Under the proposed arrangement, this figure could rise to nearly Rs 3 lakh crore. In FY 2024–25, the state received Rs 2.18 lakh crore.
The Finance Commission will submit its recommendations to the President, which will shape the financial relations between the Centre and states for the next five-year period.
