In a submission to the commission, GMCI has said taking into account the decentralisation of functions from the Centre to the states the Finance Commission should consider increasing the allocation of funds from 29.5 per cent to 45 per cent and incentives from 1.5 per cent to 5 per cent.
GMCI has pointed out that as per the 11th Finance Commission, the state gets 29.5 per cent as allotment and 1.5 per cent as incentives. These are based on projection and estimates of the Centre. "Past experience indicates that there has been shortfall in revenue mobilisation thereby affecting the quantum of devolution."
According to GMCI, "of the 45 per cent allocation to the states, the commission should evolve a formula which will encourage those states which are in the forefront of economic reforms."
GMCI has listed out a number of steps taken by the Karnataka government to push the economic reform agenda such as controlling fiscal deficits, right to information Act.
Karnataka is the "first state to introducce the fiscal responsibility Act to be followed by a seperate fiscal responsibility legislation for local bodies. It was also the only state in the country to allocate 40 per cent of its funds to the local bodies -- the highest by any state in the country".
The state has also demonstrated efficiency in tax administration acheiving the highest per capita tax collection in the country. "The right to information Act and other legislations of the state government vouch for its commitment towards more transparency and accountability in governance", GMCI said.
GMCI also pointed out the state's commitment in introducing value added tax regime and initiatives in infrasturcture developments.