Will make proposals based on NE’s socio-economic & geographical situations: Arvind Panagariya

The 16th Finance Commission while making its recommendations would keep in mind the socio-economic and geographical situations of the northeastern states, the panel chairman Arvind Panagariya said here on Thursday.

Panagariya added that like other states, the northeastern states also demanded to increase the tax devolution from the Centre from the present 41 per cent while the Tripura government has demanded an increase by 50 per cent.

Briefing the media on the second day of his visit, Panagariya said that Tripura is the 17th state in the country and the Commission has already visited and heard the demands and views of the state governments.

“Out of eight northeastern states, the Commission is yet to visit Mizoram and Arunachal Pradesh,” he said.

Appreciating the satisfactory forest cover of the northeastern states, the Finance Commission Chairman said that due to the hilly nature of the region like other mountainous states, higher costs are required in the region for building infrastructure or ferrying goods.

He said for the core Centrally Sponsored Schemes (CSS), the funding pattern for the northeastern states in the ratio of 90:10, where 90 per cent of the total expenditure was borne by the Union government and 10 per cent contributed by the state concerned while for the other states the ratio is 60:40 ratio.

The Commission would make its recommendations based on the population ratio by October this year, the chairman said, adding that as per the 15th Finance Commission the tax devolution ratio was 59 per cent for the Union government and 41 per cent for the 28 states of the country.

The panel chairman asserted that Tripura's economy is well managed and the state's finances are in a sound position.

The finance panel also held a meeting with the Tripura Chief Minister Manik Saha. Chief Secretary J K Sinha, Finance Secretary Apurba Roy and top officials of all departments were also present in the meeting.

Panagariya stated that the state's committed expenditure and debt have been on the decline which is a good sign. He added that the state's dependency on the agriculture sector is 30-35 per cent which is lower as compared to national average. Nationally, 45 per cent of the workforce is dependent on the agriculture sector.

He stated that urbanisation is happening in Tripura at a faster rate. Finance Commission Chairman however said that Tripura's per capita income and economic and social services are lower in comparison to the national average, nonetheless, it is making efforts to catch up with other states in the country.

After the council of ministers, the Commission also held a series of meetings with Panchayat Raj institutions, urban local bodies, representatives of the Tripura Tribal Autonomous District Council (TTAADC), leaders of various political parties, and representatives of trade, commerce, and industry bodies.

Tripura Chief Minister Manik Saha after meeting the Finance Commission, said in a post on the X: “The discussions included key priorities for the state's development, focusing on sustainable growth, infrastructure enhancement, and addressing unique regional challenges. I am confident that this collaboration will pave the way for a brighter future for Tripura.”

The Finance Commission Chairman, four of its members, and other accompanying officials also visited various tourist places like the Gomati, Sepahijala, and West Tripura districts.

The 16th Finance Commission was constituted on December 31, 2023, with Panagariya, former NITI Aayog Vice-Chairman, as its Chairman.

The four full-time members include Ajay Narayan Jha, a former member, of the 15th Finance Commission, and former Secretary of Expenditure, Annie George Mathew, former Special Secretary of Expenditure, Manoj Panda, former director at the Institute of Economic Growth and Soumya Kanti Ghosh, Group Chief Economic Advisor, State Bank of India.

According to officials, the 16th Finance Commission's recommendations would be available by October 31, 2025, covering an award period of five years starting from April 1, 2026.