New Delhi, Oct. 18: Northeastern states demanded more Central assistance to meet the additional requirements caused by a pay and dearness allowance revision at a meeting of chief ministers with the Prime Minister that ended without solving any of the financial problems faced by states.
Manipur chief minister O. Ibobi Singh said the finance ministry should provide extra funds by way of revenue gap grants — that help bridge the difference between a state’s expenditure and income — to cushion the impact of salary revisions patterned on the Fifth Pay Commission recommendations for Central employees.
Ibobi Singh pointed out the disparity in dearness allowance — 49 per cent of basic pay for Central and 38 per cent for state employees — saying that it created constant pressure for revision on the state government.
“This is not only unfair but also unsustainable for states because such a high raise can’t be afforded with the meagre resources at our disposal. In this regard, a provision for supporting the special category states should be made,” he added.
Sounding the same note, Assam chief minister Tarun Gogoi urged the Centre to provide 100 per cent financial assistance to the state for paying additional dearness allowance instalments to its employees and fully compensate for the salary and pension liabilities arising from the fifth pay commission recommendations.
The conference, which had proposals for a DA and bonus freeze and for cutting the states’ burden of debt to the Centre, did not achieve a consensus on any of these. The majority of states — 10 of which are scheduled to go to polls — opposed the freeze.
The debt swap plan — under which some of the states’ high-interest borrowings would have been retired in exchange for surrendering claims to a part of the loans they get from collections from NSS schemes — found few takers because the chief ministers felt they were being asked to make too large a sacrifice for too small a gain.
Gogoi alleged that the 11th Finance Commission, which last revised the formula for revenue sharing between the Centre and states, had given an unfair deal to Assam. Other insurgency-hit states like Nagaland and Jammu and Kashmir have been placed in a better position, he said.
“The overall award of the commission to Assam constitutes only 3.05 per cent of the total transfers to the states under the award. The corresponding shares of Assam under the 9th and 10th Commission awards were 3.73 per cent and 3.67 per cent, respectively,” Gogoi added.
Nagaland contended that the current trend of fiscal relations between the Centre and the state runs contrary to the agreement it had signed at the time of accession. “In spite of this solemn agreement, Nagaland is today treated on a par with any other special category state,” chief minister S.C. Jamir said.
He said the total transfer of funds from the Centre to the northeastern states had come down to 7.99 per cent from 9.84 per cent in the 10th finance commission. The percentage share of the region has declined, while that of the already advanced states has increased.
The chief ministers of Nagaland and Manipur also stressed the necessity to stick to the announcement made by the Union finance minister at Shillong last year on replacing the high-cost debt of the Northeast.
— owed to the Centre and financial institutions — with fresh borrowings at the current rate of interest within six months. They argued that in the light of the commitment made, the debt swap now being offered is inadequate and the ministry ought to review it.
The northeastern states also said financial institutions should grant loans based on the viability of projects without insisting on state guarantee.