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Sangma seeks more funds for smaller NE states from finance commission

The article published on *The Print* website, titled "Sangma seeks more funds for smaller NE states from Finance Commission," dated October 25, 2024, discusses Meghalaya Chief Minister Conrad K. Sangma's appeal to the 16th Finance Commission for increased financial allocations to smaller Northeastern states in India. The piece highlights the unique challenges faced by these states, including geographical constraints, limited resources, and developmental disparities, and emphasizes Sangma's call for a revised funding mechanism to address these issues. Below is an extensive summary of the content, elaborating on the key points, context, and implications of the chief minister's demands, while also providing background information on the Finance Commission and the broader socio-economic landscape of the Northeastern region.

Conrad K. Sangma, the Chief Minister of Meghalaya, met with representatives of the 16th Finance Commission to advocate for a greater share of central funds for smaller states in Northeast India. The Finance Commission, a constitutional body established under Article 280 of the Indian Constitution, is tasked with recommending the distribution of tax revenues between the central government and the states, as well as among the states themselves. It plays a critical role in ensuring fiscal federalism and addressing regional imbalances in development. The 16th Finance Commission, chaired by Arvind Panagariya, was constituted to make recommendations for the period 2026-2031, and its deliberations are crucial for states like Meghalaya, which face structural and economic challenges distinct from larger or more industrialized states.

Sangma's primary argument is that smaller Northeastern states, such as Meghalaya, face unique developmental hurdles that necessitate a tailored approach to funding. These states are characterized by hilly terrain, difficult accessibility, sparse populations, and limited industrial and economic activity. Unlike larger states with diverse revenue sources and economies of scale, smaller states in the Northeast often struggle with high per-capita costs for infrastructure development and public service delivery. For instance, building roads, schools, or hospitals in remote, mountainous areas is significantly more expensive due to logistical challenges and low population density, which reduces the cost-effectiveness of such projects. Sangma emphasized that the current formula for fund allocation, which often prioritizes population size or economic output, disadvantages smaller states that have limited capacity to generate internal revenue.

The chief minister urged the Finance Commission to adopt a more equitable framework that considers the specific needs and constraints of the Northeastern states. He highlighted that these states are not only geographically isolated but also historically underdeveloped due to decades of neglect and limited integration with the national economy. The Northeastern region, often referred to as the "Seven Sisters" (comprising Assam, Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, and Tripura, with Sikkim sometimes included), has long been a focus of central government policies aimed at bridging developmental gaps. However, Sangma argued that existing mechanisms, including special category status and central schemes, have not been sufficient to address the structural challenges faced by smaller states within the region.

One of the key points raised by Sangma is the need for enhanced funding to improve connectivity and infrastructure. The Northeastern states are strategically important due to their proximity to international borders with countries like China, Myanmar, Bangladesh, and Bhutan. Improved infrastructure, including roads, railways, and digital connectivity, is essential not only for economic development but also for national security. However, the high costs associated with such projects in difficult terrains often deter investment, leaving these states dependent on central assistance. Sangma's plea to the Finance Commission is rooted in the belief that increased funding can catalyze development in critical areas, thereby reducing disparities between the Northeast and the rest of India.

Additionally, Sangma pointed out the limited fiscal space available to smaller states for independent revenue generation. Unlike larger states with robust industrial bases or significant agricultural output, states like Meghalaya rely heavily on central transfers and grants. Their economies are predominantly agrarian, with a significant portion of the population engaged in subsistence farming. Moreover, the scope for taxation is limited due to low income levels and a small tax base. This dependency on central funds underscores the importance of the Finance Commission's role in ensuring that smaller states receive adequate resources to meet their developmental needs.

The article also contextualizes Sangma's appeal within the broader framework of fiscal federalism in India. The Finance Commission's recommendations are guided by principles of equity, efficiency, and need, but striking a balance between populous states with high revenue potential and smaller states with unique challenges remains a complex task. Historically, the Northeastern states have benefited from special category status, which entitled them to a higher share of central funds and concessional loans. However, the abolition of this status following the recommendations of the 14th Finance Commission and the restructuring of central assistance programs have placed additional financial strain on these states. Sangma's request for increased funding can be seen as an attempt to address the gaps left by these policy changes.

Furthermore, the chief minister's interaction with the Finance Commission reflects a broader push by Northeastern states for greater recognition of their unique socio-economic realities. Issues such as unemployment, lack of industrial growth, and environmental vulnerabilities (including frequent natural disasters like floods and landslides) compound the challenges faced by these states. Sangma's advocacy for a revised funding formula is not just about financial allocations but also about ensuring sustainable development and inclusive growth in a region that has often been on the periphery of national policy priorities.

The article also touches on the strategic importance of the Northeast in the context of India's "Act East Policy," which aims to strengthen economic and cultural ties with Southeast Asian countries. The development of the Northeastern states is critical to the success of this policy, as they serve as a gateway to the region. Sangma's call for increased funding aligns with the central government's stated objectives of transforming the Northeast into a hub of economic activity and cross-border trade. However, without adequate financial support, achieving these goals remains a distant prospect.

In conclusion, Conrad K. Sangma's appeal to the 16th Finance Commission underscores the urgent need for a more nuanced approach to fiscal allocations that accounts for the unique challenges faced by smaller Northeastern states like Meghalaya. His arguments highlight the interplay between geography, economic capacity, and developmental needs in shaping the fiscal requirements of these states. By advocating for increased funding, Sangma seeks to address long-standing disparities and ensure that the Northeastern region can contribute meaningfully to India's growth story. The outcome of the Finance Commission's deliberations will have far-reaching implications for the future of fiscal federalism in India and the developmental trajectory of the Northeast. This issue is emblematic of the broader challenge of balancing regional equity with national priorities, a task that requires both political will and innovative policy solutions. The article, while concise, sheds light on a critical aspect of India's federal structure and the ongoing efforts to create a more inclusive framework for resource distribution. (Word count: 1,050)

Read the Full ThePrint Article at:
[ https://theprint.in/india/sangma-seeks-more-funds-for-smaller-ne-states-from-finance-commission/2683061/ ]