Nagaland chief minister Neiphiu Rio has urged the 16th Finance Commission (FC) to allocate Rs. 40386.5 crore to compensate the state’s capital deficit and foster a supportive environment for development over the next five years.
Rio emphasized that this substantial funding is essential for bridging Nagaland’s infrastructural and economic gaps, allowing the state to progress alongside other regions.
Addressing the meeting with the Commission led by chairman Arvind Panagariya at hotel Vivor here, Rio emphasized that Nagaland’s statehood emerged from the historic 16 Point Agreement in 1960, which promised special financial provisions for the young state. He stressed that Nagaland’s unique political journey requires specific financial support to address its infrastructural and economic challenges.
Financial setbacks and revenue deficit grants: Rio pointed out that the state’s financial position deteriorated after the Government of India (GoI) stopped granting Additional Central Plan Assistance (ACA) in 1989-90, coinciding with the Ninth Finance Commission. This led to a steady decline in developmental activities, which Nagaland struggles to maintain due to limited resources.
To address this, Rio urged the Finance Commission to recommend revenue deficit grants that would secure Nagaland’s finances, preventing it from falling into further debt. He warned that without such grants, the state would be forced to borrow, compromising future development.
Rio also raised concerns about the declining share of states in the divisible pool of taxes, exacerbated by rising cesses and surcharges that are not shared with the states. He called for a revision in how the central pool is allocated to address Nagaland’s unique economic circumstances, emphasizing that states like Nagaland, with limited internal resources, are disproportionately affected.
Rio highlighted several critical projects for Nagaland, requesting significant funds to address a backlog of infrastructural deficits that have stunted the state’s growth.
Foothill Road (Trans Nagaland Highway): Rio outlined the proposal for the construction of the Foothills Road, also known as the Trans Nagaland Highway, which is planned to span roughly 364 kilometers along Nagaland’s border with Assam. He said that the Rs 9,000 crore project would connect Nagaland’s border areas with Assam, potentially transforming the economic landscape of mineral and agriculture-rich districts.
This highway, passing through eight districts, would benefit approximately 11 lakh people, creating access to Nagaland’s mineral resources, including coal, limestone, and chromite.
Ciethu Airport: With Kohima as the only state capital in India without an airport, Rio requested Rs 865 crore to develop an airport at Ciethu. He noted that the state government has already secured over 1,000 acres for the airport, which could eventually handle Airbus A320-class aircraft.
However, in a bid to enhance connectivity and put Kohima on the aviation map of India, Rio said the state has initially proposed to construct the airport at Ciethu, for operating ATR 72 class aircraft.
He highlighted that earlier feasibility studies by the Airports Authority of India (AAI) were favorable, and the state was ready to proceed with a phased construction plan to gradually accommodate larger aircraft.
New High Court complex: Rio pointed to the Rs 379 crore funding requirement to complete the new High Court complex in Kohima, which began in 2007. Unlike other states, Nagaland received no central support for its judicial infrastructure, leading to long delays due to lack of resources. He noted that the state has already invested Rs 162.8 crore from its limited funds.
Rio acknowledged that the high revenue expenditure of Nagaland, mainly due to an extensive government workforce, is a legacy of past insurgency issues. At the peak of insurgency, a large number of government positions were created to support social stability. He stated that Nagaland’s high employee-to-population ratio has resulted in substantial salary and pension commitments that the state struggles to manage.
He further highlighted the financial burden resulting from hiring under centrally sponsored schemes (CSS) like the Sarva Shiksha Abhiyan (SSA) and Anganwadi programs, which employ thousands.Notably, Rio cited the ongoing salary issue of SSA teachers, who were initially funded on a 90:10 central-state basis but later saw their funding support cut by the central government, leading to a shortfall that the state must now cover.
Rio also highlighted specific proposals to enhance Nagaland’s economic growth.
IISER: Though the 2015-16 Union Budget proposed setting up an Indian Institute of Science Education and Research (IISER) in Nagaland, the project remains unrealized. Rio shared that the state government has acquired 200 acres of land in Sukhovi for this purpose and urged the Finance Commission to reconsider the proposal, stressing its importance for local scientific education.
“It would not only serve as a prestigious National institute but also act as a catalyst for enhancing youth exchanges and fostering greater integration between Nagaland and the rest of the country,” Rio stated.
Municipal and Village Councils: After recently holding municipal elections for the first time in 22 years, Rio requested resources to develop these newly elected bodies, emphasizing their role in driving grassroots governance and development.
He therefore, requested the Commission to consider favourably the financial, infrastructure as well as capacity building needs of the newly elected bodies to help them make up for the time lost and the village councils to enable them to play a more effective role in rural governance at the grassroots level.
Maintenance of aging infra: With most government buildings, schools, and hospitals over 50 years old, Rio highlighted the need for maintenance funds, which were discontinued after the 12th Finance Commission. He requested Rs 7,884.8 crore to address these urgent infrastructure needs.
Externally Aided Projects (EAP): Rio advocated for an increase or removal of the expenditure ceiling on Externally Aided Projects, which could fund essential urban infrastructure, water supply, and livelihood programs, particularly in health, education, agriculture, and forestry.
Vision for economic transformation: Concluding his address, Rio urged the Finance Commission to consider Nagaland’s unique socio-political and economic circumstances. He stressed the opportunity for the Commission to support a “journey of transformation” for Nagaland, reducing its dependence on central funds while creating critical infrastructure to drive local development. He emphasized the importance of empowering local farmers and entrepreneurs through grants and micro-finance initiatives, which currently struggle due to the state’s low credit-deposit ratio.
Rio expressed optimism that with sufficient support, Nagaland could evolve into an economically significant region, contributing meaningfully to India’s growth and stability. He appealed for an arrangement that would secure Nagaland’s fiscal health and foster self-reliance, helping it overcome historical and structural challenges.