Nagaland chief minister Neiphiu Rio on Sunday said the State would still remain revenue deficit even after the proposed increase of the share of taxes of states from 42 per cent to 50 per cent.
“In fact, it will only result in a corresponding reduction in Revenue Deficit Grant,” Rio said.
“Since the share of taxes tends to vary depending on actual collections, we have the apprehension that our receipts may fall below estimates even more than what it is now,” he added.
Rio further said that the State has experienced negative receipts every year of the 14th Finance Commission period.
Rio was sharing his views on the devolution principles of the Finance Commission at the conclave of the Indian Himalayan Region states at Mussoorie in Uttarakhand.
He supported the proposal for increase of the states’ share of taxes but said since states like Nagaland, which are generally revenue deficit, will not benefit from an increased share of taxes.
More benefit will accrue if the Commission agrees to fully cover the revenue deficit and also provide funds for critical infrastructure needs so that the infrastructure and developmental deficit are effectively addressed, Rio said.
He explained how the manufacturing sector in the state was contributing a substantial amount of Rs 14,123 lakh to the state’s economy, comprising 6.09 per cent of the GSDP up to the year 1997-98.
He said this suddenly dropped to Rs 6402 lakh in 1998-99 and then to Rs 3362 lakh in 1999-2000 shrinking to 1.32 per cent of the GSDP.
Rio said this is attributed to the judgement of the Supreme Court in WP (Civil) 202 case dated 12th December 1996 in T N Godavarman vs Union of India and others against felling of trees in the Northeast.
He said the manufacturing sector in the State, which was somehow emerging in the form of saw mills, plywood and veneer mills and furniture-making units, could never make a comeback and it hardly adds about one per cent to the State’s economy till today.
“This is the price paid by the State for the sustenance of the forest cover at the behest of the nation,” Rio said.
He lamented that it has, however, never been accounted for or compensated by any of the Finance Commissions or the government of India.
“Conservation and preservation of the ecosystem is not without cost and this cost can only be understood by the people who pay the price,” he said.
He suggested that it would be more appropriate to replace the phrase ‘special category states’ with “Indian Himalayan Region States” in the proposed joint memorandum to the 15th Finance Commission.
He also urged the Centre and the 15th Finance Commission to take into consideration the various challenges faced by the Himalayan states while allocating funds.
Rio said the mountainous and hilly Himalayan states of the country face various challenges due to its topography, harsh terrain and a number of other factors which contribute to development disability.
Union Finance Minister Nirmala Sitharaman, chairman of the 15th Finance Commission N.K. Singh, Vice chairman of NITI Aayog Dr Rajiv Kumar and a host of chief ministers from the IHR states and central officials attended the conference.