Telangana’s Deputy Chief Minister, Mallu Bhatti Vikramarka, has voiced significant concerns regarding the current system of tax devolution in India, asserting that states contributing a higher proportion of taxes to the national exchequer are ultimately receiving a disproportionately smaller share in return. This statement highlights a recurring debate within Indian federalism concerning the equitable distribution of financial resources between the central government and individual states.
Vikramarka’s comments bring to the forefront the long-standing grievances of several southern states, including Telangana, Tamil Nadu, and Karnataka, which argue that their substantial tax contributions, particularly under the Goods and Services Tax (GST) regime, are not adequately reflected in the financial allocations they receive from the Centre. Critics of the current system often point to a perceived fiscal imbalance, suggesting that the existing revenue-sharing mechanisms disadvantage economically robust states while potentially favouring others.
This ongoing discussion underscores the complexities of state-Centre financial relations and the challenges in ensuring a fair and balanced federal tax system that addresses the unique fiscal needs and contributions of all states across India.