The Arunachal government has welcomed the 41 percent vertical devolution of central taxes to states, as recommended by the 15th and 16th Finance Commissions. While the 16th Finance Commission has revised the horizontal share, the 41 percent vertical devolution remains intact.
Under the Budget Estimates (BE) 2025-26, the state was allocated Rs. 24,992.35 crore with a horizontal share of 1.757 percent. In the upcoming fiscal, Arunachal has been allocated Rs. 20,665.48 crore with a revised horizontal share of 1.354 percent under the 16th Finance Commission which is lower than last year’s. The Deputy Chief Minister, who also holds the finance portfolio, has stated that devolution provides states with assured resources, helping in planning and executing development programmes effectively. However, while the continuation of 41 percent vertical devolution ensures stability and predictable funding, the reduction in Arunachal Pradesh’s horizontal share has resulted in a significant fall in actual allocations, from about Rs. 24,992 crore to Rs. 20,665 crore.
This reduction could lead to resource constraints and may necessitate replanning and reframing of certain programmes. Careful planning and prioritisation of schemes should therefore be a priority.