Sikkim eyes to double its Central taxes share, submits new criteria to 16th FC

BIJOY GURUNG

GANGTOK,: Sikkim government is pushing to double its intake from the Central pool of divisible taxes in the upcoming five years’ period by leveraging its substantial forest cover, high per capita income and Sustainable Development Goals (SDGs) milestones.

Under the 15^th Finance Commission whose award period ends on 2025-26, Sikkim has received 0.388% of the total divisible pool of Central taxes in regular instalments. Recently, the Centre had released Rs. 671.35 crore as a tax devolution instalment for Sikkim.

Now this 0.388% devolution share is sought by the Sikkim government to be doubled to 0.72% during the next five-year award period of the 16^th Finance Commission from 2026-27 to 2030-31. The Sikkim government led by Chief Minister PS Golay had on Monday held a nearly 3-hour long meeting with the 16^th Finance Commission delegation to submit its suggestions and additional criteria on how the Central pool of taxes should be shared among the States.

The Finance Commission, a constitutionally appointed body, recommends how the divisible pool of Central taxes is distributed between the Centre and the States for a period of five years.

At a press meet here in the afternoon, 16^th Finance Commission chairman Dr Arvind Panagariya shared that the commission primarily base its recommendations based on a pre-defined criteria like population (State’s population in comparison to national population), area (size of a State), income distance (allocate more to poorer States) and other parameters.

It was informed that the Sikkim government submitted that the population and area criteria weightage should be increased to 20% from the existing 15%. The Sikkim government also submitted for introduction of a new criterion based on State GDP.

“The Sikkim government suggested that the State GDP should also be looked into as to how much each State has contributed to the nation’s GDP. By this, States having high per capita income will benefit from this criterion… Sikkim having one of the highest per capita incomes also stands to benefit and has suggested 10% for this,” said the 16^th Finance Commission chairman.

Regarding forest cover criteria, the Sikkim government submitted that earlier 10% given by the 15^th Finance Commission should be enhanced to 20% given that Sikkim has taken serious efforts to preserve its substantial forest cover.

One more new criteria was suggested by Sikkim which is SDGs which were not there in the previous commission and Sikkim has sought 5% be recommended for achieving SDGs, informed Dr. Panagariya.

“Now what would be the effect of this? Under the 15th FC, Sikkim has received 0.388% of the total divisible pool and Sikkim’s calculation is that if these new criteria that Sikkim has suggested are used then Sikkim’s share will be doubled to 0.72%,” said the 16^th Finance Commission chairman.

Sikkim is the 16^th State which the 16^th Finance Commission has visited and held consultations with the respective State governments and stakeholders. The commission is expected to examine all the suggestions made, finalize its recommendations and submit the report to the President by October this year.

Besides the State government, the commission also held meetings with political parties, urban and local bodies, and key stakeholders.

The chairman stated that one of the most pertinent issues brought up by almost all the stakeholders was the issue of connectivity in Sikkim. This is an issue which we are well aware of, he said.