New Delhi, Sept. 14 -- India's three most-indebted large states-Punjab, West Bengal, and Himachal Pradesh-have asked the 16th Financial Commission for greater fiscal relief, revamped criteria for dividing central tax revenues among states, and special funds to balance growth with structural vulnerabilities.

The 16th Finance Commission, chaired by economist Arvind Panagariya, is reviewing submissions from states and central departments as it prepares recommendations for 2026-31. The commission is set to submit its report on 31 October.

The 15th Finance Commission's criteria for sharing central tax revenues with states relies on parameters such as population, geographical area, forest cover and ecology, per capita GDP disparities, tax and...