May 24, 2015

Erosion of Special Category Status of NE States Unacceptable: Manik Sarkar

TRIPURA Chief Minister Manik Sarkar has written a letter to Prime Minister Narendra Modi opposing the central government's move to virtually abolish the special category status that has traditionally been granted to all the North Eastern states. Sarkar, in his letter dated March 19, said "this dangerous and disastrous move cannot be accepted".

"I appreciate that the central government has accepted the recommendations of the 14th Finance Commission to increase the devolution of central taxes to the states from existing 32 percent to 42 percent, though our demand was to increase the devolution of taxes at least by 50 percent... But, after analysing the 14th FC's recommendations and the Union Budget for 2015-16, it appears to me that virtually the status of special category states of NER is going to be discontinued. This will be nothing but a big blow to the interest of the NE states who have been suffering from the backwardness and utter under-development due to apathetic and neglecting attitude of the earlier Union Governments causing lot of social and political problems in this region," he said.

Tripura used to receive fund under normal central assistance (NCA), special central assistance (SCA) and special plan assistance (SPA) as special category state and Rs 10,635 crore has been received during last 5 years (2010-11 to 2014-15). The state of Tripura as part of NE States suffers from infrastructure bottlenecks and is largely dependent on funding under SCA & SPA to meet its infrastructure requirement. But it appears that no recommendation has been made in this regard by the 14th Finance Commission and also no provision has been made in the Union Budget 2015-16 for NCA, SPA. This will drastically affect the position of the state finance.

"I would like to inform you that the adverse award of the 13th Finance Commission for Tripura resulted in suppressed salary expenditure under non-plan. As a result, the state government could not implement the 6th central pay commission (CPC) recommendations for the employees and pensioners. However, the state government had assessed what would have been the likely expenditure if we could implement 6th CPC recommendations over a period of 5 years (2010-11 to 2014-15). Based on the assumption of implementation of 6th CPC pay structure for the state government employees and pensioners,  the state government had projected its expenditure on Non-Plan account for the award period (2015-16 to 2019-20) to the 14th finance Commission."

"However, it appears that the 14th Finance Commission made projections for revenue expenditure on the basis of trend growth of actual expenditure which continued to be on the lower side for Tripura as we could not meet the committed liabilities on salary and pension. As per the state government’s projection, the amount of pre-devolution gap i.e. the difference between the projected non-plan expenditure and state’s own revenue comes to Rs 48,291.72 crore. In view of the pre-devolution gap of Rs 30,501 crore as assessed by the 14th Finance Commission, it has fallen short of the state government’s projection by almost Rs 17,790.72 crore," he said.

Till date, the entire gap on non-plan revenue expenditure used to be provided by the Centre for special category states, despite increase in the devolution of central taxes to the states, it would be difficult for the state government to meet the gap on non-plan account unless additional amount of fund is sanctioned. Further, the position of actual receipts under share of central taxes and gap grants against the 13th Finance Commission award reveals that we are yet to receive the full amount. As per the projections made for collection of central taxes in the Union Budget 2015-16, it appears that the Tripura's share in central taxes will come down to around Rs 3,369 crore from the projected figure of Rs 3,726 crore, resulting in reduction of Rs 357 crore in 2015-16.

So far, sharing pattern for centrally-sponsored schemes was 90:10 for special category states. However, from the Union Budget 2015-16, it appears that sharing pattern will undergo a change for a number of schemes with states to contribute higher share. In this regard it may be mentioned that any change in the sharing pattern will add to the state's liability which state may not be able to meet, thereby leading to cessation of pro-people developmental schemes in our state.

The Chief Minister said,  "The status of the special category states for the state of Tripura and other NE states, in any case, should not be discontinued. At the same time, the financial facilities used to avail by the NER states as special category states should be allowed to continue... Difficulties on account of non-implementation of the 6th CPC for the state government employees and pensioners in the state led to suppressed revenue expenditure. In view of this, an amount of Rs 17,790.72 crore may be sanctioned as special grant or normal central assistance in 5 equal installments at Rs 3,558.14 crore per year from 2015-16 to 2019-20 so that the state will be on uniform footing with other states." (END)