15th Finance Commission began its 4 day visit to the state of Arunachal Pradesh yesterday (5th April 2018). The Commission had meetings with the Hon. Chief Minister, Dy. Chief Minister, Council of Ministers and other officials of the state. Commission also held wide ranging interactions with the leaders of various political parties, Tribal Leaders, Local bodies and Leaders of Businesses and received detailed insights into the opportunities and challenges lying ahead for the state. The Commission also met the Governor Hon. Brigadier (Dr.) B. D. Mishra.

Innovative Measures required for Vertical Devolution to NE States: State Govt.

The Chief Minister welcomed the 15th Finance Commission and thanked for choosing Arunachal Pradesh as the first state for commission’s visit. Detailed presentations were made by the Team Arunachal led by Chief Minister Shri Pema Khandu on the finances of the state govt., giving in depth understanding of the efforts made by the state for development of the state and its projection for the award period of the 15th Finance Commission.

Chief Minister urged the commission to consider innovative measures for vertical devolutions, specially for North Eastern States, looking at their special requirements.

The Land of Rising Sun – Opportunities and Challenges

Government team led by the Chief Minister and the Chief Secretary Shri Satya Gopal in their 4 hours long presentation outlined the opportunities and challenges for the state and outlined broad contours of their demands. Some of the points highlighted by the State Govt. are as follows:

1. Arunachal Pradesh must be seen from the viewpoint of its peculiar geographical location, hilly terrain, hostile topography, limited working season, lack of infrastructure which creates cost disabilities. This aspect needs attention.

2. In North Eastern Region, Arunachal Pradesh stands second after Tripura in respect of total capital expenditure incurred as percentage of GSDP. The state needs more funds for infrastructure development.

3. On account of the lack of investment from private sector and low resource base, government is the major provider of employment and also funding to create infrastructure.

4. Physical as well digital connectivity is the biggest bottleneck for various developmental programmes.

5. The Credit Deposit Ratio in the state is less than 30 against a norm of 60, which shows that the outreach of the banking sector and financial inclusion in the state is very poor.

6. In a disaster prone state like Arunachal Prasdesh, Corpus of NDRF grant needs to be enhanced and Adhoc releases should be available at the beginning of the year.

7. Environment Conservation, Biodiversity of the state and the challenges related to the Climate Change should be taken into account in the context of developmental efforts made.

8. Special compensation should be made under CAMPA to strike a balance between economic activities and environmental benefits accrued by the forest cover which is 80% of the state.

9. Compensatory development plan is required for development of Tirap, Changlang & Longding Districts.

The Chief Minister on behalf of the State Government submitted a detailed Memorandum to the Commission.

Much has been achieved, Yet much remains

The Commission appreciates the constructive and useful suggestions made by the State Govt towards empowerment of the states and their development.

The Commission also placed on record its appreciation for the warm hospitality extended by the State Govt. and stated that the issues raised would receive due attention during deliberation in the Commission. The Commission also looked forward to continuing interaction with the State Government. Commission will finalise its recommendations by October 2019 after completing its discussions with all the State Governments, the Government Of India and relevant stakeholders.

Vertical devolution for northeastern states urged to address cost disabilities, infrastructure deficits and disaster resilience. The state urged the 15th Finance Commission to adopt innovative measures for vertical devolution for North Eastern states, citing Arunachal Pradesh's hilly terrain, limited infrastructure, low private investment and reliance on government funding. Key operational requests included increased capital funding for infrastructure, improved physical and digital connectivity, measures to boost banking outreach and financial inclusion, enhancement and timely release from the disaster response corpus, environmental compensation under CAMPA, and compensatory development for specified districts.