Itanagar: The Arunachal Pradesh government has requested the 16th Finance Commission to consider a special financial package of Rs 6.89 lakh crore to compensate for the state’s exclusion from externally aided projects supported by international agencies.
It has also urged the Commission to restore the special category status for Arunachal Pradesh in its fund allocation pattern.
This was informed by 16th Finance Commission member Annie George Mathew on Tuesday.
Mathew, accompanied by fellow Commission members Dr Manoj Panda and Dr Soumya Kanti Ghosh, is on a five-day visit to the state for consultations.
The request was made during meetings of the Commission with Arunachal Pradesh Chief Minister Pema Khandu and Deputy Chief Minister Chowna Mein.
“They (Arunachal) have asked from the Finance Commission a total package of Rs 6.89 lakh crore to compensate for its exclusion from externally aided projects supported by international agencies,” Annie George Mathew said.
Chief Minister Pema Khandu said, “I thank the Commission for visiting Arunachal Pradesh and appreciate their efforts to engage directly 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.”
A fruitful meeting with the Hon’ble Members and Officers of the 16th Finance Commission, led by Chairperson Smt. Annie George Mathew, today at Itanagar.
I thank the Commission for visiting Arunachal Pradesh and appreciate their efforts to engage directly with the state.
Our… pic.twitter.com/63IgPMN2D3
— Pema Khandu པདྨ་མཁའ་འགྲོ་། (@PemaKhanduBJP) April 8, 2025
Khandu stressed that ecological sensitivity must be central to Arunachal Pradesh’s fiscal planning.
He highlighted that opposition to External Aided Grants has become a major stumbling block for the state in accessing international developmental support.
“Policies designed for plains states are unsuitable for Arunachal’s hilly terrain, necessitating state-specific policy frameworks,” he added.
The chief minister further said, “Arunachal holds immense promise in the hydropower sector, a key contributor to the 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.”
The state government has also sought the restoration of Special Category Status for the state in its fund allocation pattern, a classification that would enable the state to access more favourable funding terms and greater support for its unique developmental challenges.
“The state has additionally sought an increase in the vertical devolution of central taxes allocated to states. While the 15th Finance Commission had recommended a 41 per cent vertical devolution for the 2021–26 period, Arunachal Pradesh has proposed this be raised to 47 per cent to ensure a more equitable and needs-based allocation,” the Commission member said.
“In terms of horizontal devolution, Arunachal’s share has seen steady growth from 0.244 per cent under the 11th Finance Commission to 1.757 per cent under the 15th. The state has now proposed an increase to 3 per cent, citing its strategic border location and the urgent need for accelerated development across sectors,” Mathew added.
It suggested increasing the weightage for ‘forest and ecology’ from 10 to 12 per cent, highlighting the importance of Arunachal’s forests in serving as carbon sinks and contributing to India’s national climate goals, particularly the target of net-zero emissions by 2070.
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Similarly, for the ‘demographic performance’ criterion, which currently carries a 12.5 per cent weight, the state has proposed replacing it with a new criterion focused on the “preservation of tribal heritage”, to reflect its unique cultural and demographic context, the member said.
