Assam Chief Minister Himanta Biswa Sarma has raised concerns over the state’s declining share in tax devolution.
Since the 13th Finance Commission, Assam has seen a steady reduction in its share, which Sarma attributed to lower taxes on petroleum products and liquor in neighboring states, causing a significant revenue loss for Assam.
These states, which impose lower taxes, receive compensation from the Finance Commission, further straining Assam’s revenue.
During a recent meeting with the 16th Finance Commission (FC) led by Chairman Arvind Panagariya, the Assam government proposed a solution: introducing different devolution criteria for states based on their unique challenges.
Specifically, Sarma suggested reducing the percentage of states’ share of devolution from 15% (as recommended by the 15th Finance Commission) to 10%. Panagariya acknowledged the merit of these concerns and stated that the 16th FC would consider the state’s suggestions while forming its recommendations.
This meeting highlights the ongoing fiscal challenges Assam faces, especially in balancing its revenue while competing with neighboring states’ tax policies. The 16th FC is on a four-day visit to Assam to assess the state’s fiscal needs and provide its recommendations on tax distribution between the Centre and states.