Meghalaya demands increase of vertical devolution from divisible pool to 51%, submit Rs 1.2 lakh crore proposals for 5 years period

Syllad | The Rising MeghalayaSeptember 30, 2024

Meghalaya is the eighth state, which has demanded increasing of the vertical devolution to the state from the divisible pool to 51 percent. 

The state government under the leadership of the chief minister Conrad K Sangma has also submitted proposals worth Rs 1.2 lakh crore of grants-in-aid for five years period during a meeting chaired by the Chairman of the 16th Finance Commission Arvind Panagariya held in Shillong here on Monday. 

Addressing media persons, Panagariya said, “…the state’s pitched was the vertical devolution to the state from the divisible pool be increased from the current 41% to 50%. Now, this is of course a figure we have been hearing in state after state and there is somehow across states seems to be a some consensus that this devolution ought to rise from 41% to 50% and normally of course finance commission don’t really increase or change the shares dramatically but in any case for us it is an early stage of work so we don’t know where that is going to go.”

Asked if the demand of the states is practical, the Chairman said, “That’s a very good question. This is the 8th state and we have heard the 8th time for increase from 41% to 50% of the vertical devolution. Normally, the Commission in the past have never taken a very large jump (as from) 41% to 50% is an incredibly large jump.”

“The only two examples (of increasing  are the 7th Commission had done that and the 14th Commission had done that but the general philosophy that the Commission has followed is that you should not disturb the status quo by excessive large amount because that then disturbs the budgets of everybody, Even those who benefit cannot absolved it fast enough but those who lose on account of such a large (jump) meaning it is a central government then it creates a very large imbalance suddendly and that leads the central government to react and response,” he said while adding “To the 14th Commission, the way the central government then responded was overtime the share…are charges do not go into the divisible pool expended and also the expenditure on central sponsored scheme (CSS) as proportion of the gross tax revenue decline overtime. So it leads to unintended consequences. So generally the finance commissions have gone particularly in respect with vertical devolution move only slowly if they change the status quo only a little bit incrementally. Same also goes for horizontal devolution changes do happen but generally incremental but rarely these changes become step jump.” 

The chairman also informed that the Meghalaya government had also submit proposals of over Rs 1.2 lakh crore worth of grants-in-aid for five years period. 

“Grants in aid come from the consolidated fund of the central government. Those are tricky because currently after the 14th Finance Commission, the devolution out of the central tax revenue is extremely large. So the central government in a way exercises its discretion whether it is from out of its own consolidated fund of India whether it is going to further grants according to the recommendation of the Finance Commission,” he stated. 

Stating that the horizontal devolution mandates on how the state shares is to be divided among the 28 states of India, Panagariya said, “The state has some very specific suggestions and in particular the state’s pitched for larger proportion of the state’s share to be devolved based on forest. 15th Finance Commission has given a weigh of 10% to forest and ecology. Meghalaya’s proposal for this esteemed is that we raise from 10 to 15%.”

“They (Meghalaya government) also suggested to introducing the new criterion called the rural dispersion of the population, to which they said two and a half to five percent weigh be given and if we are able to that then this will be new criterion as this rural dispersion has not been a criterion in the past for any finance commission,” he said.

Earlier, the chairman informed that the commission was very impressed with the chief minister Conrad K Sangma during the presentation.

“The state has given a fantastic presentation,” he remarked and added, “A unique feature of this presentation was that your chief minister being who is, he made a lot of interaction during the presentation. He was very engaged one could see the passion and the engagement he has with the state’s development. We were very impressed with what we saw. The presentation itself was very extensive. It covers numerous programmes relating to the demography, geography, tourism.”

He mentioned that the presentation on how the state has dramatically brought down the maternal mortality rate was very impressive.

“There is a programme under which apparently the state has recorded every single pregnant women in the state and they follow and they have that data on first, second, third trimester etc – it is very impressive.”

He said the presentation also highlighted the programme on early childhood development. Unlike other states where in the sports etc the kids get picked up at a later age 15 or 16 but Meghalaya is doing at an earlier age. 

It also related to water supply, hotels, colleges are being build, skills and entrepreneurship and overseas placement of nurses.

The chairman also noted that the state’s debt to GDP ratio is a bit on the higher side and also the fiscal deficit is on the higher side. 

Regarding the presentation on the Mission 10, the chairman said, “Another aspect of the presentation was a discussion on the mission 10 under which the state has a very ambitious plan both the programmes that it wants to undertake and the commitments it has to the people of Meghalaya and the state is targetting to take the GDP to 10 billion dollars by 2028, which would bring its per capita income to close to about 3000 dollars, which is quite good.”

Meanwhile, Panagariya said that the commission is currently very much in a state of consultation with the states and other stakeholders but consultation with the states is the major activity of the commission right now.

“Meghalaya was our 8th state to visit. We have visited 7 others. Last time we had visited Assam and the neighbouhood. We have done about quarter of the total 28 states so its still early in the game.

We have to listen to all the states,” he said while adding that “At this point we have no decision in respect to where the commission will ultimately going to come out. That is something which we will deal with much later after we have consulted with all the other states.”