Classified as a special category state earlier, Manipur suffered a setback to its finances when the state lost the special status owing to the Fourteenth Finance Commission recommendations. While presenting the Budget for 2016-17 last year, Chief Minister Okram Ibobi Singh acknowledged the hit on state’s finances due to restructuring of central assistance to the state. Even though higher devolution of taxes was positive for the state’s finances, it was not enough to meet the state’s Plan revenue expenditure, the Chief Minister had said. Though the state is grappling with its finances, no new tax was proposed in Budget last year despite the grim projections of a deficit budget of Rs 747.35 crore for 2016-17.
The state, which is one of India’s largest bamboo-producing states and where handlooms comprise the largest cottage industry, has predominantly remained an agricultural economy, with a share of 22 per cent for the farm sector while industry’s share is only 12 per cent. Manipur recorded an 8.17 per cent growth in GSDP between 2004-05 and 2015-16 on a compound annual growth rate (CAGR) basis whereas the net state domestic product (NSDP) expanded at a CAGR of 7.27 per cent. Even while lagging behind in investment, Manipur, with a population of 25.7 lakh and a literacy rate of 79.8 per cent, fared better than Uttar Pradesh on the per capita income front in 2014-15. Manipur had a per capita income of Rs 52,436, based on NSDP of 2014-15, as against Rs 48,520 per capita income of Uttar Pradesh, a state with over 77 times the population of Manipur.
The central government has sanctioned several projects for Manipur such as the Integrated Infrastructural Development Project at Moreh with a total cost of $1.19 million, the Export Promotion Industrial Park project at Khunuta Chingjin in the Kakching sub-division of Thoubal district at a project cost of $3.1 million, trade centres, one at Moreh and another at Imphal at total cost $0.4 million, industrial growth centre project at Lamlai-Napet with a total project cost of $6.2 million. Along with these projects, four new handloom production centres have also been planned. A food park at Nilakuthi has also also planned with a project cost of $5.3 million to provide common facilities like cold storage, warehouse, quality control laboratories, packaging, tool room, power and water supply and sewerage treatment.
The government also has a trilateral agreement with Thailand and Myanmar to construct a trans-Asian highway connecting India (through Manipur) to the two countries. The project is in construction phase.
But, investment activity in the state remains low. As per the Department of Industrial Policy and Promotion’s assessment of implementation of business reforms in 2016, Manipur ranked 28th out of 31 states and Union territories, with a low score of 1.19 per cent.