Telangana’s Finance Minister and Deputy Chief Minister, Mallu Bhatti Vikramarka, has criticized the central government’s formula for fund allocation, arguing that Southern States, including Telangana, deserve a larger share. He advocates for a re-evaluation of the current distribution model to better reward states that are performing well economically.
Vikramarka expressed concern over the decreasing share of tax devolution allocated to Southern States, emphasizing the need to transition away from the existing “Per Capita Income Distance” criterion. He proposed that 50 percent of weight be given to Gross State Domestic Product (GSDP) to ensure a fairer distribution of resources to states that are driving the nation’s economic growth.
While presenting the state budget for 2025-26 in the Assembly, he outlined Telangana’s position regarding the devolution of funds from the central government. He reiterated the state’s request for a more substantial central tax distribution and highlighted the need for increased financial aid to support debt stability, infrastructure projects, and social welfare initiatives.
Furthermore, Vikramarka suggested that the central government should raise the tax devolution component to 50 percent from its current level of 41 percent. He pointed out that the imposition of Cess and additional charges by the central authorities has significantly diminished the funds available to the states.
The minister raised concerns about the declining trend of tax devolution for Southern States, noting that under the 14th Finance Commission, Telangana received 2.437 percent of funds, which was reduced to 2.102 percent under the 15th Finance Commission. He described the allocation of fewer resources to high-performing states as unjust and advocated for a more equitable tax distribution system that rewards states for their significant contributions to the country’s economic progress.
