Northeastern States will continue to suffer even after recommendation of 14th Finance Commission (FFC)
Oken Jeet Sandham *
We are happy that as per the recommendation of the 14th Finance Commission (FFC), the States’ share in the net proceeds of the Union tax revenues will now be 42% than the 32% recommended by the 13th Finance Commission (TFC).
Although the transfers to the States will be seen as a quantum jump, the States which were earlier treated as Special Category States will still continue to suffer. Because as per the decision taken in the Union Budget of 2015-16, no any other provision under Normal Central Assistance (NCA) and Special Central Assistance (SCA) would be given to the Special Category States and this decision would drastically affect the position of finance in the Northeastern States.
The concept of a Special Category State was first introduced in 1969 when the 5th Finance Commission sought to provide certain disadvantaged states with preferential treatment in the form of Central assistance and tax breaks.
Though initially only three states were grouped as special category states, now there are 11 States enjoying Special Category status.
They are:
1. Assam
2. Nagaland
3. Jammu & Kashmir
4. Arunachal Pradesh
5. Himachal Pradesh
6. Manipur
7. Meghalaya
8. Mizoram
9. Sikkim
10. Tripura
11. Uttarakhand
The rationale for special status is that certain states, because of inherent features, have a low resource base and cannot mobilize resources for development. Some of the features required for special status are:
(i) hilly and difficult terrain;
(ii) low population density or sizable share of the tribal population;
(iii) strategic location along borders with neighboring countries;
(iv) economic and infrastructural backwardness;
(v) non-viable nature of state finances.
Special Category States also received specific assistance addressing features like hill areas, tribal sub-plans, and border areas. Beyond additional plan resources, Special Category States can enjoy concessions in excise and customs duties, income tax rates and corporate tax rates as determined by the government.
Special Central Assistance (SCA) were provided for special projects/programs e.g., Western Ghats Development Program (WGDP), Border Areas Development Program etc.
Special Plan Assistance (SPA) were given only to Special Category States to bridge the gap between their Planning needs and resources. In other words, SPAs are Additional Central Assistance (ACA) to Special Category States.
SPA were provided to the Special Category States for funding of projects identified by the States that are not covered by any Central scheme and for non-recurrent expenditure of a developmental nature, based on the recommendation of the Planning Commission. So now, there will be no allocation under SPA and SCA as per the decision taken in the Union Budget of 2015-16.
Among the States in the country, the Northeastern States bordering Myanmar, Bangladesh, China will continue to suffer maximum as the FFC recommendation will not make them better position in the years to come.
The Northeastern States should fight back to get their Special Category Status because it not only helps them to grow developmentally but also protects them to some extent.
Weakening the Border States particularly Northeastern ones by removing the Special Category Status given to them will not only make the people in the region insecure but also the country vulnerable, because they are surrounded by three major countries.
* Oken Jeet Sandham wrote this article for e-pao.net
The writer can be reached at nepsonline(AT)yahoo(DOT)com
This article was posted on August 27 , 2016.
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