Maharashtra’s Fiscal Discipline and Economic Contribution Commendable: Dr. Arvind Panagariya

 

State presents key demands to the 16th Finance Commission during Mumbai meeting

Mumbai, May 8, 2025: Dr. Arvind Panagariya, Chairman of the 16th Finance Commission, lauded Maharashtra’s fiscal discipline and the state's significant contribution to India’s economic growth. A meeting of the 16th Finance Commission was held at the Sahyadri Guest House in Mumbai.

Chief Minister Devendra Fadnavis, Deputy Chief Minister Eknath Shinde and  Deputy Chief Minister and Finance & Planning Minister Ajit Pawar welcomed Dr. Arvind Panagariya and Commission members Dr. Manoj Panda and Dr. Soumya Kanti Ghosh.

On behalf of the state government, Chief Minister Fadnavis submitted a formal memorandum to the Commission, highlighting key demands and suggestions aligned with the Commission’s terms of reference. Maharashtra has requested an increase in the Vertical Devolution (Centre-State tax sharing) from the current 41% to 50%. It also urged that cesses and surcharges be included in the divisible pool of taxes and that the Centre’s non-tax revenues be considered for sharing.

The state suggested new criteria for Horizontal Devolution (inter-state distribution), including metrics like “Sustainable Development & Green Energy” and “Growth Contribution of States to India’s GDP.” It also requested reducing the weight of the Income Distance criterion from 45% to 37.5%.

Demand for ₹1.28 Lakh Crore Special Grants

The state sought ₹1,28,231 crore under special grants for key projects, including the implementation of the Mumbai Metropolitan Region’s Economic Master Plan, interlinking of rivers, construction of a new High Court complex, prison infrastructure, post-graduate hostels for medical students, and eco-tourism projects. Maharashtra also requested Revenue Deficit Grants from the Commission.

Increased SDRF and Local Bodies Fund Requested

The state urged the Commission to enhance the State Disaster Response Fund (SDRF) allocation and to revise the Centre-State funding ratio from 75:25 to 90:10. It further recommended increasing the grant for local self-governments from 4.23% to 5% of the divisible pool and distributing it in proportion to rural and urban populations. Additionally, separate grants were sought for public bus transport and fire services for cities and municipal corporations.

During the session, the Finance Commission also interacted with representatives from industry bodies, local self-government institutions, and political parties.