The Fifteenth Finance Commission meets representatives of Trade and Industry in Sikkim

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The Chairman of the 15th Finance Commission, Shri N.K. Singh at an investor meeting with the Goldman Sachs India & others, in New Delhi on September 18, 2019.
The Chairman of the 15th Finance Commission, Shri N.K. Singh at an investor meeting with the Goldman Sachs India & others, in New Delhi on September 18, 2019.

The Fifteenth Finance Commission meets representatives of Trade and Industry in Sikkim

By PIB Delhi

The 15th Finance Commission headed by Chairman, Shri N.K. Singh along with its Members and senior officials met today with the representatives of the Trade and Industry bodies in Sikkim.

 The Commission observed that:

  • Sikkim has been able to sustain a relatively higher growth in income. The trend growth rate of the nominal growth rate of GSDP has been 13.5% from 2011 to 2018. This was as high as 24.9% from 2005 to 2018. The high growth rate has been mainly due to the hydropower sector and pharmaceutical industries.
  • The State has abundant opportunities in areas of tourism, horticulture & floriculture, organic products, pharmaceuticals, and ethnic handlooms/handicrafts.
  • 59% of State’s GSVA comes from the Secondary sector. This is very high as compared to other States.
  • However, according to Ease of Doing Business ranking-2017-18, Sikkim is third lowest after Meghalaya and Arunachal Pradesh. The State has given the following reasons for its low ranking in Ease of Doing business:
    • Sikkim currently does not have a Companies Act, as, after the repeal of the old Act, the new Companies Act has not been notified.
    • It is an environmentally sensitive zone so the clearance cannot be automatic as each issue needs a closer look.
    • The land laws protect the interest of the ethnic community and any change of title requires approval at the highest level.
  • According to 5th Employment Un-employment survey of Labour Bureau 2015-16, Sikkim has second-highest unemployment rate (after Tripura) of 18.1 per cent. This implies jobless growth in the State.
  • The growth rate of GSDP has not kept pace with revenues of the State.

Regarding the Infrastructure issues and poor connectivity in Sikkim, the Commission observed:

  • A small airport with limited capacity has become operational, however the number of flights to the airport are limited are not frequent.
  • Sikkim also lacks rail networks.
  • The State is entirely dependent on the National Highway-10(NH-10), the only link with the rest of the country. The frequent road disruptions due to natural calamities on this single lane road creates huge problem for transportation of goods resulting in rise in prices of essential goods and high cost of living in the State.

Difficult geographical terrain, recurring devastation and its impact on maintaining assets are other challenges for development of manufacturing industries in Sikkim.

According to the State Memorandum –

  • The tax collected before GST regime from some of the ancillary industries associated with pharmaceuticals, has been flowing out in the form of input tax credit to main producers.
  • Sikkim did not need GST compensation in year 2018-19.

Representatives of Sikkim Chamber of Commerce, Cipla Pharmaceutical, Zuventus Pharmaceutical, Intas Pharmaceutical, Marchak Manufacturing Pvt. Ltd. Corrugated Boxes, Sikkim Distilleries Ltd., Sun Pharmaceuticals, Mato-Potter, Designer Candles, Temi Tea Estate, Tea Bag & Flavoured Tea, Bamboo Handicrafts, Govt. Fruit Preservation  and Simsar Bakery attended the meeting.

The Commission noted all the concerns highlighted by the representatives of the Sikkim Trade and Industry and promised to address them in its recommendations to the Central Government.