Tax devolution to Madhya Pradesh by the Centre slashed by Rs 11,556 crores

The Union Government has slashed Madhya Pradesh’s share in taxes by Rs 11,556 crore in fiscal year 2020-2021, second time in a row. According to information received here, the information was shared in budget documents presented in Parliament on Saturday.  The Union Finance Minister announced while presenting the budget on Saturday.

In last year’s 2019-2020 budget, Modi-led NDA Government had reduced Rs 2,677 Crore in the state’s share taxes. The Budget was presented in June last year after 2019 parliamentary elections.

The devolution for Madhya Pradesh, after last year’s reduction, had stood at Rs 61,074 Crore. After this year’s cut, the devolution has come down further to Rs 49,518 Crore, a reduction of Rs 11,556 Crore.

Sources in the Kamal Nath led-Congress government pointed out on Sunday that Madhya Pradesh had been deprived of Rs 14,233 crore in the last two budgets by the Centre.

The Fifteenth Finance Commission, under the chairmanship of NK Singh, has recommended that states receive 41 per cent share of the total central taxes for the year 2020-21.

The finance commission decides what percentage of the total share of central taxes will go to the states. The 14th Finance Commission in its report had recommended that a record 42 per cent of the divisible pool of taxes should go to the states. However, one per cent has been adjusted for the development of two newly formed Union Territories, Jammu & Kashmir and Ladakh.

Uttar Pradesh has received the highest share among the states at 17.9 per cent of the total funds, followed by Bihar at 10.06 per cent, Madhya Pradesh followed at 7.8 per cent and Maharashtra at 6.1 per cent.

While UP’s share is virtually unchanged compared to the 14th Finance Commission, Bihar’s share has increased marginally by 0.4 percentage points. Madhya Pradesh’s share has increased by 0.3 percentage points and Maharashtra’s by 0.6 percentage points.

State Congress Spokesperson Abbas Hafeez Khan said, "The Modi Government is giving step motherly treatment to opposition ruled states. Earlier, the union government had slashed flood-relief funds and now this."

He further said, "It will adversely hamper the major welfare schemes and development of the state. Modi government should rethink over it."

BJP has 28 MPs from the state and they need to raise the issue in Parliament and take it up with the Prime Minister and the Finance Minister, he added.