Bihar Chief Minister Nitish Kumar greets 16th Finance Commission Chairperson Arvind Panagariya in Patna
By Neeraj Kumar
Patna: The 16th Finance Commission team is currently on a three-day visit to Bihar. During this tour, the Bihar government has presented several key demands, including special state status for Bihar and immediate financial assistance of ₹1 lakh crore. Additionally, the state has asserted its right to at least 50% of the net income from central taxes.
Demand for Special Status Reiterated
The Finance Commission team, led by Chairperson Arvind Panagariya, met with Bihar Chief Minister Nitish Kumar and Deputy Chief Minister Samrat Chaudhary in Patna. During the discussions, the Bihar government reiterated its long-standing demand for special status, highlighting the state’s urgent financial needs.
Call for 50% Share in Central Taxes
The Bihar government has argued that it deserves a grant of approximately ₹1.59 lakh crore to accelerate poverty alleviation efforts. This funding would support infrastructure development, industrial growth, and the implementation of welfare schemes. Chief Minister Nitish Kumar emphasised the need for special financial assistance, stating that Bihar’s share in central taxes should be increased to 50%.
Arvind Panagariya, who is also the Chancellor of Nalanda University in Rajgir, is well-versed in Bihar’s socio-economic challenges. Chief Minister Kumar expressed optimism that Panagariya’s understanding of the state’s background would lead to strong support for Bihar’s demands.
Specific Financial Demands
Deputy Chief Minister Samrat Chaudhary outlined specific financial requirements, including a demand for ₹1,00,079 crore to address various developmental needs. This includes ₹24,206.68 crore for strengthening Panchayati Raj institutions and ₹35,025.77 crore for urban development.
The Bihar government has also requested an increase in its share of central taxes from 41% to 50%. Currently, the 15th Finance Commission allocates 15% of funds based on a population fertility rate of 12.5%. However, Bihar has proposed that tax distribution should instead be based on the Multi-Dimensional Poverty Index (MPI), which would benefit states like Bihar with higher poverty levels.
Arvind Panagariya acknowledged that adopting the MPI for tax distribution could significantly aid states facing acute poverty.
