Odisha seeks ₹12.59 lakh crore from 16th Finance Commission

Bhubaneswar, Feb 6: The Mohan Majhi-led government has formally requested financial assistance of ₹12,59,158 crore from the 16th Finance Commission, chaired by Dr. Arvind Panagariya.

The request was made during a meeting attended by Chief Minister Majhi and senior state officials, where Odisha presented its financial demands for the next five years to support the ‘Samruddha Odisha by 2036’ development plan.

During the discussion, Odisha urged the Finance Commission to include cesses and surcharges in the divisible pool of taxes and proposed an increase in the states’ share of central taxes from the current 41% to 50% under vertical devolution. Additionally, the state sought an increase in its share of total tax devolution from 4.528% to 4.964% and recommended modifications to the criteria used in horizontal devolution.

The state government suggested several key changes, including replacing the current population-based weightage of 15% with a metric focused on "Vulnerable Sections of People," which would consider Scheduled Caste (SC) and Scheduled Tribe (ST) populations along with individuals aged 80 and above, while retaining the same weightage. Odisha also proposed replacing the area-based criterion with population density and assigning it a 5% weightage. It further recommended modifying the "Forest & Ecology" category, which currently carries a 10% weightage, to focus exclusively on "Forest Cover" while maintaining the same percentage.

Odisha agreed with retaining the Income Distance criterion at 45% but suggested increasing the weightage for Fiscal Discipline from 2.5% to 15%, replacing the existing "Tax and Fiscal Effort" category. Additionally, the state proposed reducing the weightage for Demographic Performance from 12.5% to 10%.

Highlighting the financial requirements, Chief Minister Majhi detailed the allocation of funds under various categories. The state sought ₹9,88,422 crore to compensate for the pre-devolution revenue deficit, ₹1,10,434 crore for state-specific needs, ₹1,00,036 crore as grants for local bodies, ₹31,004 crore for disaster response, and ₹29,252 crore for disaster mitigation.

The Chief Minister also suggested that the 16th Finance Commission allocate combined grants for all rural and urban local bodies at 2% of the projected gross revenue receipts of the Union for the 2026-31 period. This, he argued, would significantly enhance funding for local governance in Odisha, ensuring better financial support for its development initiatives.