The 15th Finance Commission headed by Chairman, N.K. Singh along with its Members and senior officials met 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 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 hydro-power 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 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 low ranking in Ease of Doing business is because Sikkim currently does not have a Companies Act, as after the repeal of the old Act, 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 ethic community and any change of title requires approval at 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. 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 that 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. 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.
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