Arunachal requests FC for special package to compensate externally aided projects loss

OUR CORRESPONDENT

ITANAGAR: The Arunachal Pradesh government has requested the 16th Finance Commission to consider a special financial package of Rs 6.89 lakh crore to compensate for the state’s exclusion from externally aided projects supported by international agencies.

Finance Commission Member Annie George Mathew told a press conference here on Tuesday that the request was made during meetings of the Commission with Arunachal Pradesh Chief Minister Pema Khandu and Deputy Chief Minister Chowna Mein.

Mathew, accompanied by fellow Commission members Dr Manoj Panda and Dr Soumya Kanti Ghosh, is on a five-day visit to the state for consultations. On March 28 Arunachal Pradesh Urban Affairs, Civil Aviation, and Land Management minister Balo Raja apprised Union Finance Minister Nirmala Sitharaman about the state’s deprivation of financial assistance from international institutions due to alleged interference from China.

The Arunachal Pradesh government has also requested the restoration of Special Category Status for north-eastern and Himalayan states, a classification that would enable the state to access more favourable funding terms and greater support for its unique developmental challenges, she said.

“The state has additionally sought an increase in the vertical devolution of central taxes allocated to states. While the 15th Finance Commission had recommended a 41 per cent vertical devolution for the 2021-26 period, Arunachal Pradesh has proposed this be raised to 47 percent to ensure a more equitable and needs-based allocation,” the Commission member said.

Vertical devolution, as recommended by the Finance Commission, refers to the distribution of net tax proceeds between the union and state governments to ensure that states have sufficient financial resources to fulfil their responsibilities and contribute to national development.

“In terms of horizontal devolution, Arunachal’s share has seen steady growth from 0.244 per cent under the 11th Finance Commission to 1.757 per cent under the 15th. The state has now proposed an increase to 3 per cent, citing its strategic border location and the urgent need for accelerated development across sectors,” Mathew disclosed. Horizontal tax devolution concerns the distribution of the revenues among the states themselves, based on various criteria. The government has also recommended changes to the criteria used for horizontal devolution.

It suggested increasing the weightage for ‘forest and ecology’ from 10 to 12 per cent, highlighting the importance of Arunachal’s forests in serving as carbon sinks and contributing to India’s national climate goals, particularly the target of net-zero emissions by 2070. Similarly, for the ‘demographic performance’ criterion, which currently carries a 12.5 per cent weight, the state has proposed replacing it with a new criterion focused on the “preservation of tribal heritage” to reflect its unique cultural and demographic context, the member said. “The state has also called for cent per cent central funding for centrally sponsored schemes (CSS), rather than the current 90:10 funding pattern applicable to northeastern states,” Mathew said.

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