Horizontal Devolution and Karnataka's Concerns

The podcast discusses the issue of horizontal devolution and its impact on Karnataka's share of taxes. Initially, population distribution determined the distribution, but factors like area, forest cover, and fertility rates were later considered. However, a key metric called 'income distance' has a significant weight in the calculation. This metric compares a state's per capita income to its word capital income, determining the difference. Karnataka's concern arises from its higher per capita income due to IT firms in Bengaluru, resulting in a smaller share of taxes. The state argues that regional inequity should be considered, as Bengaluru's growth isn't adequately benefiting other parts of Karnataka.