Despite making an investment of 278.44 crore in 2014-15, the returns were ‘zero’ in both percentage and absolute terms
Morung Express News
Dimapur | April 10
By all accounts, Nagaland State Government’s investment prowess could give even top financial honchos a run for their money. Or, conversely, astound them.
The State’s returns from investment of Rs. 278.44 crore in 2014-15 in various financial instruments and companies stood at Zero, both in percentage and absolute terms, stated a report by the Comptroller and Auditor General (CAG). “The return for this investment was ‘Nil’ during the last five years while the Government paid an average interest rate of 6.81 per cent on its borrowing during 2014-15,” it added.
“The Report of Comptroller and Auditor General of India on State Finances for the year ended 31 March 2015” was recently tabled in State Legislative Assembly and buried under a ‘13 Minute’ session.
While the report shows that the major part of the investments were made in five government companies, that included a non-working company (NWC) viz. Nagaland Sugar Mills Ltd (NSML), the zero returns on other entities like Co-operatives and Joint Stock Companies are a cause for serious concern.
The Break-up
The break-up of the investment shows that out of Rs. 287 crore, Rs. 190.48 crore was spent on government companies undertaking as under – five government companies (105.57 crore), Distillery project (0.30 crore) and Public Sector and other Undertaking (84.61 crore).
Rs. 32.11 crore was invested in two joint stock companies and Rs. 55.85 crore in statutory corporations, co-operative bank and societies etc. However, all the investments depict zero returns in last five years. (See Table)
Position of Government companies
According to the CAG, Nagaland has five government companies – four working and one not working. The four working companies—Nagaland Industrial Development Board; Nagaland Industrial Raw Material & Supply Corporation Ltd; State Mineral Development Corporation; and Nagaland Handloom & Handicraft Development Corporation—were all incurring losses.
Apart from NIDC, the accounts of the three remaining companies were in arrears for the period ranging between 2-5 years, the CAG observed. The account for non-working NSML was in arrears for last 37 years. Consequently, the CAG said the actual financial status of the companies could not be assessed at the time of auditing.
Reason for low returns
Commenting on the Report, a CAG official, on the condition of anonymity, said that while returns on investments are usually low in many states, as it involves supporting loss making Public Sectors Undertakings (PSUs) enterprises, the zero returns shown even on bank deposits were a cause for big worry. While the government supporting PSUs serves social and economic purposes by way of employment, the zero returns on other instruments are quite suspicious, he indicated.
The CAG Report suggested identifying companies/corporations which are endowed with low financial, but high socio-economic, returns and see if high cost borrowing needs to be invested in those companies/corporations. Besides, the government may expedite closing down of the Non-working companies, it added.
Will these suggestions improve returns? That’s an even bigger question than the dubious zero-returns play of the Nagaland State Government.
Did investments reach where desired? Are the zeroes intentionally produced? Could there have been some returns which may have disappeared?
These are questions the CAG’s next audit may want to investigate.
