Itanagar, Apr 9: The Arunachal Pradesh government has requested a special financial package of Rs 6.89 lakh crore from the 16th Finance Commission to offset losses arising from its exclusion from externally aided projects (EAPs) backed by international agencies.

Finance Commission member Annie George Mathew shared the details at a press conference on Tuesday, following a series of meetings with Chief Minister Pema Khandu and Deputy Chief Minister Chowna Mein. Mathew, along with fellow Commission members Dr Manoj Panda and Dr Soumya Kanti Ghosh, is on a five-day visit to the state for pre-recommendation consultations.

According to state officials, the exclusion from international funding is a result of alleged interference from China, which has objected to foreign agencies supporting development initiatives in the border state.

In addition to the financial package, the state has sought the restoration of Special Category Status for northeastern and Himalayan states to enable access to more favourable funding terms and targeted development support.

The state has also proposed raising the vertical devolution of central taxes to states from the current 41 per cent to 47 per cent, and increasing its own share in horizontal devolution from 1.757 per cent to 3 per cent, citing its strategic location and urgent developmental needs.

Arunachal has recommended changes in the criteria used for determining horizontal devolution. It proposed increasing the weightage for ‘forest and ecology’ from 10 to 12 per cent, highlighting the state’s vital role in carbon sequestration. It also suggested replacing the ‘demographic performance’ criterion (currently 12.5 per cent) with a new metric focused on “preservation of tribal heritage” to better reflect its cultural and demographic context.

Further, the state has demanded 100 per cent central funding for centrally sponsored schemes (CSS), replacing the current 90:10 funding pattern applied to northeastern states.

The 16th Finance Commission, constituted on December 31, 2023, under Article 280 of the Constitution, is mandated to recommend the distribution of tax revenues between the Centre and the states for the five-year period from April 1, 2026, to March 31, 2031. It is also responsible for determining principles for grants-in-aid to states from the Consolidated Fund of India.

Mathew said the Commission has completed consultations in 22 states so far and aims to cover all 28 before submitting its final report to the central government by October 31, 2025.