ITANAGAR, April 9: The Arunachal Pradesh government has urged the 16th Finance Commission to restore the state’s ‘special category status’ and approve a comprehensive financial package amounting to ₹6.89 lakh crore. The request aims to compensate for the state’s exclusion from externally aided projects (EAPs) supported by international development agencies.
This request was confirmed by Annie George Mathew, a member of the 16th Finance Commission, during her ongoing five-day consultation visit to Arunachal Pradesh. She was accompanied by fellow Commission members Dr. Manoj Panda and Dr. Soumya Kanti Ghosh.
The demand was raised during official meetings with Chief Minister Pema Khandu and Deputy Chief Minister Chowna Mein.
“They (Arunachal) have asked from the Finance Commission a total package of ₹6.89 lakh crore to compensate for its exclusion from externally aided projects supported by international agencies,” Mathew stated.
Chief Minister Pema Khandu welcomed the Commission’s visit and expressed appreciation for its effort to directly engage with the state. “Our state faces unique developmental challenges and submitted a detailed memorandum focusing on the need for sustainable and inclusive development, with the goal of improving the ease of living and quality of life for our citizens,” he said.
Khandu emphasized that ecological sensitivity must remain central to Arunachal Pradesh’s fiscal planning. He pointed out that opposition to External Aided Grants has significantly hindered the state’s ability to access international developmental support.
“Policies designed for plains states are unsuitable for Arunachal’s hilly terrain, necessitating state-specific policy frameworks,” Khandu added.
The Chief Minister also highlighted Arunachal’s potential in the hydropower sector, calling it a key contributor to the central government’s Viksit Bharat 2047 vision. “We are hopeful that the Commission will address these concerns and support a fiscal pathway tailored to Arunachal’s aspirations and potential,” he stated.
In addition to requesting the restoration of Special Category Status, the state government has proposed an increase in the vertical devolution of central taxes. While the 15th Finance Commission recommended a 41% share of central taxes for states during 2021–26, Arunachal has sought an increase to 47%, advocating for a more equitable and needs-based allocation.
Regarding horizontal devolution, Arunachal’s share has steadily increased from 0.244% under the 11th Finance Commission to 1.757% under the 15th Commission. The state now seeks a jump to 3%, citing its strategic border location and the pressing need for rapid infrastructure and social development.
The Arunachal government also proposed increasing the weightage for ‘forest and ecology’ from 10% to 12%, underlining the state’s rich forest cover that functions as a vital carbon sink, contributing to India’s net-zero emissions goal by 2070.
Further, the state has asked for a revision in the ‘demographic performance’ criterion, currently carrying a 12.5% weight. It suggested replacing it with a new metric focused on the “preservation of tribal heritage,” to better represent the state’s unique demographic and cultural identity.
