Uttar Pradesh has demanded 50% share in Central taxes, 16th Finance Commission Chairman Arvind Panagariya revealed here on Wednesday.

Sharing details of his meeting with Chief Minister Yogi Adityanath during a press conference, Panagariya said the CM has submitted a memorandum urging the Centre to raise Uttar Pradesh’s share in Central taxes from 41 per cent to 50 per cent.

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The state has also sought a special DDA fund for targeted development schemes. The UP government presented its reform initiatives, which were appreciated by the Commission, along with proposals to revise the weightage of key devolution criteria, he informed further.

Sharing details of Uttar Pradesh’s key demands, Panagariya said the state has proposed changes to the devolution formula – suggesting a reduction in the weightage for income distance (from 45% to 30%), geographical area (15% to 10%), demographic performance (12.5% to 7.5%), and forest cover (10% to 5%), while seeking increases in the weightage for population (15% to 22.5%) and tax collection effort (2.5% to 10%).

He also explained that the main job of the Commission is to prepare a proposal for dividing taxes between the central government and the states, which is then presented to the President of India.

The Finance Commission chairman mentioned the 15th Finance Commission’s recommendation for a horizontal devolution as population 15 per cent, area 15 per cent, forest 10 per cent, tax effort 2.5 per cent, and demographic performance 12.5 per cent.

He added that the previous Commission gave the highest weightage of 45 per cent to the income distance criterion.

The Chairman praised Uttar Pradesh as a well-governed state. He said that Uttar Pradesh’s tax collection is in proportion to GSDP which is the highest in the country. He also noted that Uttar Pradesh’s fiscal deficit is within normal limits and its debt-to-GDP ratio is also within manageable levels.

He further said that in the last Finance Commission, 41 per cent of tax revenue was shared with the states and 59 per cent remained with the central government. This is the current division of tax revenue.