The Chairman of the 16th Finance Commission, Arvind Panagariya, stated on Thursday that the Commission, while formulating its recommendations, would take into consideration the socio-economic and geographical conditions of the northeastern states. Speaking to the media, he emphasized that these states have unique challenges due to their terrain and development needs, which necessitate special attention in the fiscal allocation process.
The Finance Commission is on a four- day visit to Tripura.
Panagariya further highlighted that, similar to other states, the northeastern states have also urged an increase in tax devolution from the Centre beyond the current 41 percent. The Tripura government, in particular, has put forth a demand for a 50 percent increase in tax devolution, underscoring its need for greater financial resources to support developmental initiatives.
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During the briefing on the second day of his visit to Tripura, Panagariya mentioned that the state is the 17th in the country to be visited by the Commission as part of its nationwide consultation process. The Commission has already engaged with the governments of several other states to understand their fiscal requirements and policy concerns. However, among the eight northeastern states, the Commission is yet to visit Mizoram and Arunachal Pradesh.
The Chairman also acknowledged the satisfactory forest cover in the northeastern states and explained that, due to their hilly and mountainous terrain, infrastructure development and transportation of goods in these regions involve significantly higher costs compared to the plains. Recognizing this, he pointed out that the funding pattern for core Centrally Sponsored Schemes (CSS) in the northeastern states follows a 90:10 ratio, wherein the Union government bears 90 percent of the total expenditure, and the respective state governments contribute the remaining 10 percent. In contrast, for other states, the funding ratio stands at 60:40.
According to Panagariya, the Commission’s recommendations will be based on the population ratio and are expected to be finalized by October this year. He also referred to the provisions set by the 15th Finance Commission, which allocated 59 percent of the tax devolution share to the Union government and the remaining 41 percent to the 28 states across the country.
Speaking on Tripura’s fiscal management, the Chairman noted that the state’s economy is well-regulated, and its financial position remains stable. The Finance Commission held a key meeting with Tripura Chief Minister Manik Saha, in which several senior officials, including Chief Secretary J.K. Sinha and Finance Secretary Apurba Roy, were present. Discussions in the meeting revolved around the state’s financial health, committed expenditures, and debt management.
Panagariya observed that Tripura has witnessed a decline in its committed expenditure and overall debt levels, which he termed as a positive economic indicator. He further noted that the state’s dependency on agriculture is approximately 30-35 percent, which is lower than the national average of 45 percent. The Chairman also highlighted that Tripura is experiencing rapid urbanization. However, he pointed out that the state’s per capita income, along with its economic and social services, remains lower than the national average. Despite this, he expressed optimism that Tripura is making significant efforts to bridge the gap with other states in terms of development.
Following the high-level meeting, the Finance Commission also held extensive consultations with various stakeholders, including representatives from Panchayati Raj institutions, urban local bodies, the Tripura Tribal Autonomous District Council (TTAADC), leaders from different political parties, and members of trade, commerce, and industry bodies. These discussions aimed at gaining a comprehensive understanding of the state’s developmental priorities and fiscal challenges.
Tripura Chief Minister Manik Saha later shared insights from the meeting on his social media account, stating, “The discussions included key priorities for the state’s development, focusing on sustainable growth, infrastructure enhancement, and addressing unique regional challenges. I am confident that this collaboration will pave the way for a brighter future for Tripura.”
During their visit, the Finance Commission Chairman, along with four of its full-time members and other accompanying officials, also toured several tourist destinations in the state, including areas in the Gomati, Sepahijala, and West Tripura districts.
The 16th Finance Commission was constituted on December 31, 2023, with Arvind Panagariya, a former Vice-Chairman of NITI Aayog, as its Chairman. The four full-time members of the Commission include Ajay Narayan Jha, a former member of the 15th Finance Commission and former Secretary of Expenditure; Annie George Mathew, former Special Secretary of Expenditure; Manoj Panda, former Director at the Institute of Economic Growth; and Soumya Kanti Ghosh, Group Chief Economic Advisor at the State Bank of India.
As per official sources, the 16th Finance Commission is expected to submit its final recommendations by October 31, 2025. These recommendations will cover an award period of five years, beginning from April 1, 2026. The insights gained from consultations across states, including Tripura, will play a crucial role in shaping the fiscal policies and resource allocation strategies outlined by the Commission.
