Jharkhand Demands Increased Tax Devolution for Development Needs | 02 Jun 2025

Why in News? 

The Jharkhand government has urged the Sixteenth Finance Commission to increase the state’s share in central tax devolution from the current 41% to 50%, citing its economic contributions and unique developmental needs. 

Key Points 

  • Higher Tax Devolution for Developmental Needs:  Jharkhand, contributing significantly through mining and bearing its environmental and social costs, stressed the need for increased financial support to improve key sectors like agriculture, health, education, and livelihoods.  
    • The state highlighted its large farming-dependent population and potential for agricultural growth, calling for flexible fund usage to address local needs effectively. 
  • Issues Related to Mining Activities: The state emphasized planned land reclamation, proposing that mined land be returned after operations end. It also seeks the release of ₹1.40 lakh crore owed by mining companies operating in the region. 
  • State Budget and Welfare Initiatives: Jharkhand’s ₹1.45 lakh crore budget allocates ₹62,844 crore for social welfare targeting the poor, women, and vulnerable groups. ₹13,363 crore is dedicated to women’s financial support schemes, and ₹5,000 crore for free electricity to eligible residents. 

16th Finance Commission 

  • The 16th Finance Commission, established under Article 280 of the Indian Constitution, will cover the five-year period starting 1st April 2026. 
  • It is chaired by Dr. Arvind Panagariya, with members Ajay Narayan Jha, Annie George Mathew, Manoj Panda, and Soumya Kanti Ghosh (part-time).  
    • Ritvik Ranjan Pandey serves as Secretary. 
  • Role and Terms of Reference: The Finance Commission is a constitutional body formed every five years to maintain fiscal federalism and recommend: 

 

  • Importance: 
    • Ensures equitable resource allocation to address regional disparities. 
    • Supports grassroots governance and local development. 
    • Advises on fiscal discipline, expenditure efficiency, and public finance reforms. 

Finance Commission