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Assembly polls 2023: Economic snapshots of 3 poll-bound northeastern states

Let us analyse the economic issues and present a brief political scene of the poll-bound states of Tripura, Nagaland, and Meghalaya

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Indivjal Dhasmana New Delhi
7 min read Last Updated : Jan 31 2023 | 10:03 AM IST
Three of seven sisters -- Tripura, Nagaland and Meghalaya -- are going to polls next month. While Tripura will go to polls on February 16, elections will be held in the other two northeastern states on February 27. It is too early to guess as to which way the political winds are blowing in the three states having 60 seats each. However, we can analyse economic challenges in each of the states, which may decide the political future there.

A common theme of these three states is that they are heavily dependent on the Centre for their expenditure, both development and non-development. Let us analyse their economic issues and present a brief political scene.

Tripura

Less than one-third of the state's tax requirement is met by its own tax revenues (OTRs). In fact, it is expected to be less than 30 per cent in both 2020-21 and 2021-22. Moreover, most of its borrowed funds are spent on capital expenditure. For instance, only 39.5 per cent of borrowed funds were spent on capital expenditure in 2020-21, up from 37.3 per cent in the previous year, according to data by the Comptroller and Auditor General (CAG). The case was not such in the previous two years when capital expenditure was higher than borrowed funds. The state's fiscal deficit is projected to be wider than permitted by the Centre at 5.2 per cent and 6.3 per cent of the gross state domestic product (GSDP) during 2021-22 and 2022-23. Unemployment in the state was less than the national average during 2019-20 and 2020-21, but the case was different in the previous two years.

For instance, the unemployment rate was a whopping 10.1 per cent in 2018-19, more than 5.8 per cent of the national average, according to the figures released by the Ministry of Statistics and Programme Implementation (MoSPI). The state is on the path of economic recovery as its GSDP growth rate touched 8.7 per cent in 2021-22, the same as the country's gross domestic product (GDP). However, inflation has been an issue in the state. It still has not come down below six per cent in December, unlike the national average. It had stood as high as 8.08 per cent in October but came down to 6.84 per cent in November and 6.13 per cent in December this year. The inflation rate averaged 6.75 per cent in the first nine months of the current financial year, almost the same as the national average.

Politics

BJP had ended the CPI (M)-led left front rule of 25 years in the previous election in 2018. The BJP in between changed its state Chief Minister Biplab Kumar Deb, replacing him with Manik Saha in May 2022.

Nagaland

The state has a huge problem of unemployment. It has been in double digits at least since 2017-18. While the national average stood at just 3.2 per cent in 2020-21, the unemployment rate in the state was 19.3 per cent. Surprisingly, the rate came down in the year despite it being a Covid-affected year from almost 26 per cent in 2019-20.

Like Tripura, Nagaland is too dependent on the Centre for its revenue needs. In the last six years, its OTRs did not even constitute one-fourth of its total tax needs. These constituted a bit over 23 per cent of the state's tax receipts and are projected to remain more or less the same in 2021-21 and 2022-23. Most of its borrowed funds go to meeting revenue expenditure needs in recent years. The proportion of borrowed funds to capital expenditure constituted just 14.6 per cent in 2020-21, a bit lower than 15.3 per cent in the previous year.

The case was different in the previous two years. The fiscal deficit of the state was projected to be higher than the permissible limit in 2021-22 but is expected to come down within the limit in the current financial year. It is still early to see if the state has recovered from the Covid-induced economic slowdown as the data is yet to be released. However, inflation remained over six per cent for 2021-22 and the first nine months of the current financial year. It should be noted that inflation was almost double of the national average in 2021-22. But since then, it is in line with the national average, albeit higher than 2021-22.

Politics

Nagaland has no Opposition in its Assembly comprising 60 members at present. The National Democratic Progressive Party, which was formed by a breakaway faction of the Naga People’s Front, won the elections of 2018. They formed a government in alliance with the BJP. Subsequently, the Naga People’s Front also joined the government and no one was left in the Opposition.

Meanwhile, the union government has been holding separate talks with the Nationalist Socialist Council of Nagalim (Isak-Muivah) since 1997 and the Naga National Political group (NNPG), a conglomerate of Naga groups from 2017 to find a solution to the Naga political problem. It signed the Framework Agreement with NSCN(IM) in August 2015 and an Agreed Position with NNPG in November 2017. However, no final solution has been achieved as the NSCN(IM) has been persistent in its demand for a separate flag and constitution for the Naga people.

Meghalaya

Inflation in the state has been lower than the national average. While the nation saw inflation averaging over six per cent in the first nine months at the national level, it was just 4.37 per cent in Meghalaya. It was quite lower at 3.27 per cent in the previous year, in line with the national average of 3.75 per cent. However, the inflation rate in the Covid year of 2020-21 was higher at 8.51 per cent in the state in line with 8.72 per cent at the national level. Unemployment in the state has been lower as can be seen from the table. Like the other two states, OTRs hardly met even one-third of the total tax receipts of the state.

The better thing was that the proportion of borrowed funds mostly went to meet the capital expenditure needs of the state. It stood at 71 per cent in 2020-21, higher than 62.8 per cent in the previous year. Most of the borrowed funds went to capital expenditure in the previous two years. In fact, capital expenditure was higher than borrowed funds in 2018-19 by around seven per cent. The fiscal deficit of the state remained within control, except for the Covid-affected year of 2020-21.

Politics

Six party-led Meghalaya Democratic Alliance (MDA) government completed its full term of five years which is not usual in the state. Meghalaya politics is rife with large-scale defections. In fact, Meghalaya witnessed the biggest defection between 2018-2023. 

Former Congress Chief Minister Mukul Sangma-led 12 MLAs joined the Trinamool Congress (TMC) in November 2021, which made TMC the main Opposition party in the state overnight.

In the 2018 Assembly elections, the Congress won 21 seats in the 60-member Meghalaya house, but during the last five years, all the MLAs joined other parties, including the TMC and the National People's Party (NPP). Out of 12 MLAs of the TMC, 5 MLAs have also left the party and joined other parties.

In the meantime, one MLA from NPP joined TMC. With this, TMC's strength increased to eight MLAs in the Assembly.

Topics :Assembly electionsMeghalayaTripuraNagalandindian politicseconomy

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