By Moa Jamir
When the 15th Finance Commission (XV-FC) visited Nagaland in November 2018, the state presented a robust memorandum of demands, seeking substantial financial support to develop a range of infrastructural projects. Among the proposals, the top priority was Rs 400 crore for a new Raj Bhavan in Thizama, Kohima, with justifications citing space constraints and referring to the current site as “the smallest Raj Bhavan in the country.” Other proposals covered infrastructure like government offices, quarters, District Commissioner and Superintendent offices, the completion of the New High Court Complex, landing strips, schools, higher education institutions, eco-tourism centres, and fire stations. Notably, there were limited proposals focused directly on generating income, with just four hydroelectric projects submitted.
While Nagaland’s government eagerly awaited the final XV-FC report, which was tabled in Parliament on February 1, 2021, the outcome was somewhat underwhelming. Apart from general recommendations on the distribution of taxes, revenue deficit, and other grants, the Commission approved only six specific projects for Nagaland, amounting to Rs 525 crore. The recommendations included reduced funding compared to what was proposed. For instance, instead of Rs 400 crore for the new Raj Bhavan, only Rs 150 crore was sanctioned. Funding for landing strips and fire stations, originally proposed at Rs 90 crore and Rs 60 crore, was accepted as suggested. For the New High Court Complex, Rs 100 crore was approved out of a proposed Rs 194.84 crore. Additionally, the XV-FC endorsed grants for police check posts along the Indo-Myanmar border and for coffee development.
The Commission’s report also offered sobering observations on Nagaland’s financial landscape, highlighting concerns over the state’s burgeoning budget deficit and the heavy burden of committed expenditures. It urged the state to reduce its salary burden to free up resources for development and to broaden its tax base through improved tax administration. Another significant concern was the rise in poverty, which, according to the Commission’s data, increased from 9% in 2004–05 to 18.88% in 2011–12, despite the economic growth Nagaland reported in recent years. The XV-FC attributed this to inequalities and uneven development across the state, which remains a persistent issue.
Nagaland has made strides in addressing its budget deficit and poverty, yet dependency on central funds and high committed expenditures continue to dominate its finances. Additionally, regional disparities are stark. For example, the recent District Domestic Product (DDP) report highlighted economic imbalances among Nagaland’s districts. In 2019–20, Dimapur recorded the highest Gross District Domestic Product (GDDP) at Rs 543,611 lakh, while Longleng’s economy was the smallest, with a GDDP of only Rs 621.12 lakh. Dimapur’s per capita income, at Rs 154,002, was also the highest, contrasting sharply with Mon district, which recorded the lowest per capita income at Rs 77,738. These differences underscore the need for more equitable development across the state.
With the 16th Finance Commission begins its consultations, it is crucial for the Government of Nagaland to align its proposals towards direct developmental objectives. While a new Raj Bhavan and other administrative infrastructure are significant, Nagaland must prioritise projects that directly address pressing challenges, such as high unemployment and regional disparities. The state’s proposals should reflect a commitment to fostering income-generating industries, reducing dependency, and ensuring that all districts experience the benefits of development.
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