By George B. Lyngdoh
As I was scrolling through updates on X, I came across a post by Chief Minister, Conrad K. Sangma regarding his meeting with the Union Finance Minister Nirmala Sitharaman. The Chief Minister expressed gratitude for a commitment of Rs 2070 crore under SASCI 2.0 for infrastructure development (capex) and other liabilities. However, this support comes after a reduced annual devolution of nearly Rs 2000 crore under the 16th Finance Commission recommendations.
Does one-size fit all?
The 16th Finance Commission’s framework shows that the five-year devolution is broadly guided by four key criteria:
1. Income Distance (45%) – measuring how far a state’s per capita income is from the highest-performing state
2. Population (15%) – based largely on the 2011 Census
3. Area (15%) – rewarding larger geographical spread
4. Forest & Ecology (10%) – recognizing ecological services
5. Demographic Performance (12.5%) & Tax Effort (2.5%) – performance-linked incentives
This approach has again revealed a structural imbalance when applied uniformly across different states. Performance-linked criteria such as demographic strength, geographic spread and contribution to national GDP offer very limited scope for states like Meghalaya. Major constraints like high production costs arising from landlocked geography, limited market access, relatively low purchasing power, high labour costs, and the dominance of an informal economy are factors that hold Meghalaya back.
Meghalaya’s population is comparable to that of a mid-sized Indian city, making its weight in national scale negligible. A “one-size-fits-all” approach, therefore, disadvantages smaller states.
Are we being forced to adopt Panchayati Raj?
What is observed is the continued emphasis of the 14th to 16th Finance Commissions on rural and urban governance systems. What is more boggling is that this criteria aligns only with the Panchayati Raj framework as a basis for increased devolution. When Panchayati Raj Institutions were introduced, Meghalaya, Nagaland, and Mizoram were exempted by the Government of India, in recognition of their unique governance systems under the Sixth Schedule. However, successive Finance Commissions have largely ignored this constitutional reality, extending only token support to the governance systems through Autonomous District Councils and municipalities.
This reflects not only non-recognition but also an implicit pressure to adopt Panchayati Raj structures, despite the existence of deeply rooted traditional institutions such as Headmen, Nokmas, Sordars, Waheh Shnong, and their village communities that continue to play a vital role in governance and public service delivery. Their contributions span village mobilization, implementation support for programs like MGNREGA, NRLM, Social Audit, Public Heath, natural resource management, disaster response, elections, village defence, forest governance, among many others. These institutions provide the critical last-mile connection between the state and the people.
Yet, their efforts remain largely ignored by national frameworks because they are informal, undocumented, and not captured in standardized data systems. Perhaps, even seen as outdated! This creates a serious bias: what is not recorded is not recognized, and what is not recognized is not funded! Despite being constitutionally acknowledged under the Sixth Schedule, these traditional systems are effectively sidelined in fiscal support, which is both disheartening and unjust. Moreover, what is the reason for the continued delay in adopting the proposed amendment to the 6th Schedule?
Has policy overshadowed Constitutional safeguards?
The foundations of India’s federal structure were carefully laid by leaders such as Sardar Vallabhbhai Patel, Pandit Jawaharlal Nehru and others, who accommodated diversity through Constitutional arrangements. The current emphasis on rigid, standardized criteria undermine this vision and are eroding trust in national institutions. Decisions that have far-reaching consequences for small and geo-politically fragile states often appear to be based on bureaucratic engagement, desperately reducing complex realities into simplified presentations and on a single-formula-driven outcomes. Do policy makers have the mandate to ignore Constitutional safeguards? Is the Finance Commission above the Constitution?
Give and take away
There is a fiscal contradiction. While states like Meghalaya face reduced financial devolution, the Union Government continues with Centrally Sponsored Schemes that mandate 10% State share. For small states with limited fiscal capacity, this creates a heavy financial burden. Existing liabilities from past central schemes continue to accumulate, while new schemes are added, further straining already constrained state finances. For the recent Rs 900 Crore Jal Jeevan Mission (JJM) liability, Rs 90 Crore has to be paid by the State while the success rate is hardly 50%! Who wanted this ill designed Scheme in the first place? I feel that this situation is like a modest-income household being repeatedly compelled to dine at an expensive hotel —regardless of affordability—while also being required to pay a fixed share of the bill. Such forced arrangements place smaller states in an increasingly unsustainable position, while ignoring increasing amounts of committed expenditures.
Policy hypocrisy?
The introduction of SASCI 2.0, which is a loan, further complicates matters. Instead of compensating for reduced devolution through grants, states are being encouraged to take on additional debt for infrastructure development.
For ecologically fragile hill states, this raises serious concerns. While the Finance Commission assigns 10% weightage to forest and ecology, the parallel push for infrastructure expansion through loans is a policy contradiction. It increases debt burdens while threatening environmental sustainability and disregarding the role of traditional institutions in managing these ecosystems. The nation’s so called ‘think-tanks’ have totally lost it!
We need a new approach
Policy actors residing in remote Delhi should not take our traditional institutions and communities’ voluntary support for granted. The unpaid, unrecorded, and unrecognised contributions of headmen, Nokmas, Sordars, and village communities are foundational strengths. Without them, governance in Meghalaya would collapse at the last mile.
Moreover, launching central schemes by forcing 10% State share are political rhetorics at the cost of tribal communities. This fiscal injustice must stop. If the Union Government is genuinely committed to supporting small and hill states, certain corrective measures should be considered.
♦ The mandatory state contributions under centrally sponsored schemes for small states should reduced to 0%. This could free up significant funds —potentially in the range of Rs 1500–2000 crores.
♦ Additionally, there is a need for a different devolution framework that recognises Sixth Schedule governance systems rather than forcing indirect conformity to Panchayati Raj models.
♦ Further, if there are concerns regarding the efficiency or accountability of State governments or district councils, additional funds could be routed directly to community-level structures through targeted schemes such as livelihood or rural development programs. This would ensure that resources reach the grassroots without being constrained by rigid and often exclusionary evaluation criteria.
Can policy neglect geopolitics?
What is at stake is not merely financial allocation, but the recognition of governance systems, cultural institutions, and lived realities that do not conform to standardized metrics. Continued neglect and misalignment in policy frameworks risk fostering frustration and alienation.
At a time when our North East is surrounded by hostile geopolitics, it is essential that fiscal policies bring trust, respect diversity, and strengthen the bond between the Union and its states and communities, else the remote & disconnected policy actors are only putting the region at great risk.
A more inclusive, and context-sensitive fiscal approach is an immediate demand.
(The writer is a former legislator of Meghalaya Legislative Assembly and can be reached at [email protected])
