Tripura Chief Minister Manik Saha on Friday, 19 June called on the Central Government to remove the ceiling on Externally Aided Project (EAP) borrowings for Northeastern states, arguing that fixed caps are throttling infrastructure investment and slowing economic growth across the region. Saha made the appeal at a seminar titled 'Leveraging Externally Aided Projects in the North Eastern States' held in Shillong, in the presence of Union Finance Minister Nirmala Sitharaman.

Tripura's EAP Track Record

Saha positioned Tripura as one of the most effective utilisers of externally aided funding in the country. Over the past two decades, the state has partnered with international development agencies including the World Bank, the Asian Development Bank (ADB), Indo-German Development Cooperation, and the Japan International Cooperation Agency (JICA). These collaborations, he noted, have advanced socio-economic progress while simultaneously building administrative and institutional capacity.

Tripura is currently executing eight major EAPs spanning industrial infrastructure, urban development, tourism, climate resilience, and the socio-economic advancement of Scheduled Tribes. The state's strategic partnership with the ADB — particularly through the North East Economic Corridor Study — has mapped significant investment potential across road connectivity, power, healthcare, and urban development.

Economic Growth and Capital Spending

Saha cited Tripura's economic trajectory to underscore the state's capacity to absorb larger development funds. The state's Gross State Domestic Product (GSDP) has nearly doubled, rising from ₹55,984 crore in 2019-20 to ₹1,00,795 crore in 2025-26. Annual capital expenditure has grown even more sharply — from ₹2,079 crore in 2021-22 to a record ₹10,478 crore in 2025-26, a nearly five-fold increase that officials argue demonstrates strong fund absorption efficiency.

The Funding Gap Problem

The Chief Minister flagged a structural concern with how EAPs are actually financed on the ground. While projects are formally structured on an 80:20 Centre-State funding ratio, states are separately required to bear costs related to land acquisition, forest land diversion, and utility shifting. These additional outlays, Saha said, effectively push the real state contribution closer to a 60:40 split — a significant burden for a smaller Northeastern state.

He urged the Centre to scrap the EAP ceiling that has been in place since 2023-24 and replace it with a dynamic borrowing framework based on a state's administrative capability, project implementation capacity, and fund absorption efficiency rather than rigid fixed caps.

Other Demands: Revenue Gap Grant and 'Pride of Hills'

Saha also raised concerns over the discontinuation of the Revenue Gap Grant following recommendations of the 16th Finance Commission. While acknowledging Central support through the 'Pride of Hills' initiative, he requested enhanced allocations under the scheme to adequately cover the state's committed expenditure requirements.

He expressed gratitude to Prime Minister Narendra Modi and Finance Minister Sitharaman for sanctioning several externally aided projects that have contributed to Tripura's development, while reiterating the state's commitment to infrastructure building, employment generation, and industrial growth with continued Central support.

Broader Context for the Northeast

The seminar brought together senior policymakers, financial experts, and government representatives from across the Northeastern states, focusing on strategies to maximise EAP utilisation region-wide. Saha's push to link borrowing limits to performance metrics rather than fixed caps aligns with the broader thrust of the Government of India's Act East Policy, which prioritises accelerated development of the Northeastern frontier. Notably, this is not the first time Northeastern chief ministers have collectively pressed the Centre on EAP constraints — the demand has gained fresh urgency as the region's infrastructure ambitions outpace current funding ceilings.