Northeast states demand 25% boost in federal tax share from Finance Commission

Four northeastern states have pressed India's 16th Finance Commission for a substantial increase in their share of federal tax revenues, arguing that enhanced funding is crucial for sustaining the region's economic momentum.

The delegation, led by Meghalaya Chief Minister Conrad Sangma, met with Finance Commission Chairman Arvind Panagariya in New Delhi to present their case for improved resource allocation. The group included Mizoram Chief Minister P Lalduhoma, Tripura Finance Minister Pranajit Singha Roy, and Sikkim government officials.

The states are seeking at least a 25% increase in tax devolution compared to the 15th Finance Commission period, along with a dedicated infrastructure fund. Their argument centres on proven results from previous funding increases.

Sangma highlighted that a 20% rise in devolution between the 14th and 15th Finance Commissions led to a dramatic 100% jump in state capital expenditure. This additional fiscal space translated into measurable improvements in healthcare, tourism growth, and infrastructure development across multiple sectors.

The northeast region faces unique geographical and developmental challenges that require sustained investment. Despite resource constraints, these smaller states have demonstrated significant economic progress during the current commission period, which runs until 2026.

The Finance Commission's recommendations determine how central tax revenues are distributed among states for five-year periods, making these decisions critical for state development plans. For northeastern states with limited revenue bases, these allocations often determine the pace of infrastructure development and public service delivery.

Commission officials responded positively to the presentation, acknowledging both the region's distinctive challenges and its recent economic achievements. The states submitted a joint memorandum outlining their shared priorities and concerns.