Thiruvananthapuram, Dec 10 (PTI) Kerala has demanded an increase in its share of central taxes from the current 41 per cent to 50 per cent and a reduction in the per capita-based share for states from the divisible pool, from 45 per cent to 30 per cent, the Chairman of the 16th Finance Commission, Arvind Panagariya, said on Tuesday.
He stated that the commission is keeping an open mind regarding these demands and will make a decision after completing consultations with all the states.
Addressing a press conference after discussions with the state government and local bodies, Panagariya noted that Kerala had expressed concerns about being penalised for achieving better growth and controlling its population.
Kerala has also demanded a new variable based on population density, which none of the previous finance commissions had considered, he said.
Additionally, Kerala has sought a 100 per cent increase in its State Disaster Response Fund (SDRF) grants and called for raising the central share in central government projects from 60 per cent to 75 per cent.
Panagariya added that, as a state with a long coastline, Kerala has also requested an increase in the Centre's assistance to the disaster relief fund.
He commented that the cess and surcharges imposed by the Centre, which many states have opposed, remain a complex issue.
"The central government has the constitutional mandate to impose cess and surcharge. When state governments demand an increase in their share of taxes to 50 per cent, there is a possibility that the Centre may impose more cess and surcharge. Both the Centre and the states have legitimate grounds," Panagariya said.
Further, he mentioned that Kerala has requested a reduction in the area-based share from the divisible pool, from the current 15 per cent to 5 per cent.
Panagariya stated that with his visit to Kerala, the commission has now visited 14 states, with 14 more remaining before preparing the report.