•    Out of every rupee spent, 76 paise go to non-development expenditure, servicing of debt  
•    State’s own development expenditure just around 3 paise for every 1 rupee 

 

Moa Jamir 
Dimapur | March 31

With a new financial year in Nagaland and across India from April 1, new policies changes, particularly those announced during the budget are set into motion. Accordingly, a big question is, where the government is getting its resources from and where it plans to spend it?

One answer could be found in the State’s Budget 2022-23 presented in the Nagaland Legislative Assembly by the Chief Minister and Minister-in-Charge of Finance, Neiphiu Rio on March 22, which among others, listed the possible source of resources (receipts) and expenditures during the new financial year.  

For the 2022-23 financial year, the budget estimated receipts of Rs 24,239.96 crore and expenditures of Rs 24239.50 crore. Even though there was current year’s transactions surplus of Rs 150.30 crore, with the cumulative deficits over the years, the 2022-23 financial is estimated to close at the deficit of Rs 2212.74 crore.

While the general budget document presented gave an overall picture of the source of Government’s resources and its spending, a clear answer can be found by analysing the ‘Explanatory Memorandum’ laid before the State Legislature along with the budget.

It would also explains why Nagaland politicians or those at the helms of affairs dash to Delhi at every given opportunity.

Where Rupee comes from?

Basically, a government gets the bulk of its resources from of taxes – direct and indirect taxes, while non-tax revenue, including money for services it provides, dividends and profits received from public sector enterprises and interest from borrowing etc also contribute. 

Things are bit different though in Nagaland with State’s Own Tax and Non-Tax Revenue just around 7 paise out of every rupee received. It is estimated to be Rs 1708.11 crore in 2022-23. 

As a result, out of every rupee Nagaland government receives, around 93 paise is estimated to come from outside according to the budget document.  

Out of this, 19 paise was in the form State’s Share in Central Taxes (Rs 4646.80 crore) and 40 paise from Central Assistance (Grants & Loans) of Rs 9720.20 crore, therefore, somewhat inconsequential to its financial health. 

However, over 34 paise out of every 1 rupee came was in form of State’s Internal Debt or borrowing from various sources including Ways and Means Advances, a short-term loan from Reserve Bank of India to tide over temporary financial requirement.

The State’s Internal Debt (including WMA from RBI) was estimated to be Rs 8313.18 crore in 2022-23. 

Most borrowings, as per the ‘Explanatory Memorandum’ were in the form of the WMA from RBI (Rs 6000 crore) and loans from Open Market (Rs 2224 crore).

Receipts from recovery of Loans and Advances by State Government were estimated at just Rs 1.51 crore. 

Hence, with around 93 paise coming from outside out of which 40 paise is in the form Central Assistance, having a ‘cordial’ relationship with the Union Government makes sense. 

Where Rupee goes to?

The bigger question, however, is where the resources are spent? Ideally, most resources should be spent on developmental activities and provision of services, but given the nature the source of resources, the allocation of funds is also affected. 

As a result, out of the total estimated expenditures of Rs 24239.50 crore in 2022-23, only Rs 5815.13 was allocated as ‘Development Expenditure,’ including money received for Centrally Planned Schemes (CPS)/Centrally Sponsored Schemes (CSS). 

In other words, out of every rupee expenses Nagaland Government plans to incur, just around 24 paise would go for developmental activities. 

The rest – around 76 paise is spent on ‘Non-Development Expenditure’ and servicing of debt. 

If one looked at State’s own Development Outlay for 2022-23, it is mere Rs 775 crore or just over 3% of the total estimated expenditures, indicating around 3 paise for every 1 rupee spent.

Predictably, given the dependence on borrowing, 33 paise out of 1 Rupee expense goes for servicing of debts, including repayment of the WMA to RBI(Rs 8014.18 crore).  

Again, the bulk of expenses are designated on ‘Non-Development Expenditure’ at Rs 10410.19 crore for 2022-23 or indicating 43 paise out of every rupee spent.

As per the Explanatory Memorandum,’ which incidentally estimated Non-Development Expenditure’ at Rs 11614 crore, major portion of the money goes for Salary and Wages at Rs 7090 crore  (or over 29 paise) and Pension at Rs 2587 crore (over 10 paise).

Nagaland had a total of 1,23,182 employees in Government’s payroll as on March 31, 2021, it highlighted. 

It also included ‘Interest Payment’ which according to 2022-23 Budget estimates was Rs 1028.26 crore or 4.24% of the total estimated expenditures. 

Interestingly, in his concluding remarks on the general discussion on the budget, the Chief Minister pointed out that the state is spending 94.13% of fund for payment of salaries, wages, pension, debt servicing etc and only 5.87% is for the developmental activities. However, the State is yet to find a way out of the current situation, increasing the dependency on the Union Government. 

Correction:

An earlier version of this article was published with the headline "For every rupee to Government coffer, around 97 paise to come from outside." The correct figure should have been '93 paise.' The article has been updated accordingly.