Manipur Budget for 2025-26 : Unequal sharing of resources
- Part 1 -

K Timothy Zimik *

INTRODUCTION

The State of Manipur occupies a total area of 22,327 square kilometres. Geographically, Manipur is divided into two contrasting landscapes - (1) the fertile Imphal valley area at the centre constituting about ten percent of the total area and (2) the hill areas occupying the ninety percent of the total area - encircling the Imphal valley from all sides.

Prior to the creation of seven new districts, Manipur was divided into nine districts. The Imphal valley comprising the four districts of Imphal East, Imphal West, Bishnupur and Thoubal has an area of about 2,238 square kilometres (10%) and the five hill districts of Churachandpur, Ukhrul, Tamenglong, Chandel and Senapati have a total area of about 20,089 square kilometres (90%).

The Imphal valley is densely populated whereas the hills are sparsely populated. As per the census 2011, the total population of Manipur is 28,55,794 (sources: Registrar General of India and Statistical Handbook of Manipur 2017). Out of this total population, the Imphal valley has a population of 16,33,672 (57.20%) and the hill areas have a population of 12,22,122 (42.80%).

ECONOMIC BACKWARDNESS OF THE HILL DISTRICTS OF MANIPUR

As compared to the Imphal valley, the hill areas of Manipur are indeed economically very backward. In terms of infrastructure and economic development, the disparity and divide between the valley and the hills is very wide and is increasing.

In its past budget presentations, the Congress Government had acknowledged this big divide and asserted in the State Legislative Assembly that the Government had taken great strides to bridge the divide between the valley and the hill areas of the State. But, on the ground, no concrete steps were actually taken to bridge the widening gap. Even the present Government of Manipur headed by the BJP has not done better.

Despite the fact that more than 50% of Manipur's revenues is received by the State Government on account of hill people and their areas, no proportionate funds are allocated to the hill areas of Manipur in the yearly budgets of Manipur since the creation of the State of Manipur in 1972.

There are many reasons for the economic backwardness of the hills of Manipur which include, inter alia, the unequal distribution of resources between the hills and the valley of Manipur. In this article, we will focus mainly on the budget and the unequal sharing of resources between the valley and the hill areas of Manipur.

SOURCES AND SHARING OF REVENUE

From the yearly State budget presentations, it is seen that 90% of the revenues of Manipur is provided by the Central Government. In other words, the State of Manipur generates only about 10% of its resources.

The Central Government provides the 90% of the State's revenues in the form of Central taxes and Grants-in-aid. The State of Manipur is heavily dependent on the grants-in-aid from the Central Government.

The State of Manipur receives the grants from the Centre:
(1) grants for revenue deficit,
(2) grants for local bodies (15th FC),
(3) grants for SDRF (15th FC),
(4) grants for SDMF (15th FC) ,
(5) grant for health sector (15th FC), and
(6) grants for CSS/ CPS/NEC/NLCPR, etc.

The State of Manipur also borrows money and receives loans. Apart from the above, the Central Government has been taking up Centrally Sponsored Programmes such as Pradhan Mantri Gram Sadak Yojana (PMGSY), Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), National Food Security Act (NFSA), Right to Education Act (RTE Act), National Highways Act, etc.

The development programmes we see and the benefits we get in the hill areas of Manipur such as roads and bridges connecting the villages, the National Highways, the telecommunication and internet networks, gas connections, subsidized foodgrains, free education, etc. are on account of Central Government schemes/ programmes.

Let us see how the States of India including the State of Manipur get the share of revenues from the Central Government. As per the Constitutional arrangement, the Finance Commission (FC) allocates the State's share in the divisible pool of Central taxes based on a formula.

The 15th Finance Commission has used six criteria/formulas for devolution of Central taxes to the States for the period 2021-26 and certain weight has been assigned to each criterion. The criteria and the weight assigned for each criterion percentage-wise are as below:

(1) INCOME DISTANCE is the difference between the per capita income of a State with the average per capita income of all States. States with lower per capita income would be given a higher share to maintain equity among States. Out of 100, weight assigned for this criterion is 45.

(2) POPULATION (2011) is an indicator of the expenditure needs of a State. Weight assigned for this criterion is 15.

(3) AREA is used as a criterion because a state with larger area has to incur additional administrative costs to deliver services. Weight assigned for this criterion is 15.

(4) FOREST AND ECOLOGY criterion is used because States with larger forest covers bear the cost of not having area available for other economic activities. Weight assigned for this criterion is 10.

(5) DEMOGRAPHIC PERFORMANCE criterion has been introduced to reward efforts made by States in controlling their population. Weight assigned for this criterion is 12.5.

(6) TAX AND FISCAL EFFORTS criterion is used to reward States with higher tax collection efficiency. Weight assigned for this criterion is 2.5. To address the huge disparity between the Imphal valley and the hill areas of Manipur in terms of economic development and to find the correct way to distribute the resources between the valley and the hills, the above 6 formulas adopted by the 15th Finance Commission must be applied in Manipur.

This exercise provides us a clear picture of how deep is the resource-deprivation being inflicted upon the hill people of Manipur and the way to solve the problems. The valley has performed better in controlling population. Hence, higher weight assigned to the valley.

The hills of Manipur are not getting their legitimate share of revenues provided by the Central Government despite the fact that the share of the hills should be roughly about 51% of such revenues.

The views expressed in this article are his personal views.

This Article was published in The Sangai Express and The Aja Daily on the 30th October, 2020. This article is an updated version.

To be continued...