Nagaland CM demands 16th Finance Commission for over Rs 40,000 crore for capital deficit

Nagaland Chief Minister Neiphiu Rio has sought grants of over Rs 40,000 crore from the 16th Finance Commission, which is visiting the state for a three-day assessment of its fiscal needs and development requirements. The grant has been requested to compensate for the capital deficit.

During a meeting with the members of the commission, CM Rio urged a financial arrangement ensuring the long-term economic stability of Nagaland, enabling the state to play a pivotal role in the country's progress and development.

Projecting some of the requirements, Rio said Rs 9,000 crore and Rs 865 crore are needed to construct a 364 km highway along the state’s border with Assam and an airport at Ciethu near here, respectively.

The chief minister also proposed to the Commission that grants amounting to Rs 40,386.5 crore to compensate for the capital deficit to provide an enabling atmosphere for development so that the state can reduce dependence on Revenue Deficit Grants gradually.

Rio informed the Commission that much progress has taken place in many key sectors of the state’s economy, while the agri and allied sector is gradually shifting to commercial crops, with significant expansion of plantation crops like coffee, rubber, palm oil and areca nuts.

It is important now to provide funding for value-addition activities such as sorting, grading and processing, and for market linkages so that the farmers derive maximum value for their produce, he said.

Nagaland also has the added advantage of organic farming practices that can command premium prices and create a niche market with high demand, the chief minister said.

The momentum needs to be sustained to make farming a viable alternative and a key engine of economic growth at the grassroots level, Rio said.

Nagaland was unable to develop the secondary sector because of the adverse financial condition of the state for decades and consequently, growth has gravitated towards the Tertiary Sector which constitutes the largest share of the state’s economy at 63.57 per cent, he said.

This has largely happened with minimal intervention from the Government’s side, mainly due to the rapidly growing hospitality and tourism sectors and the youthful population of the state, he said.

Since most of the government buildings related to delivery of public services such as schools and hospitals, and administration in the state are over 50 years old and in a dilapidated condition, Rio proposed provisions of funds amounting to Rs 7,884.80 crore.

Sources said that inclusive of the proposals made by the CM, the government through the Finance Department submitted a memorandum seeking an amount of nearly Rs 1 lakh crore as grants for various state-specific projects. (With PTI inputs)