By Moa Jamir
Nagaland's economic landscape presents a complex picture, where ambitious future projections clash with persistent governance challenges. Recent budget announcements and economic surveys reveal an aspiring state striving for growth, yet grappling with numerous constraints. The Comptroller and Auditor General's (CAG) reports serve as a crucial reality check to these aspirations.
On the positive side, the 2025-26 Budget, presented by Chief Minister Neiphiu Rio, highlighted a gradual improvement in the state's fiscal health. While the projected deficit of Rs. 843.21 crore remains a concern, it signifies a notable reduction from previous years, with increased state revenue collection as a major contributor.
However, this positive trend is overshadowed by the state's heavy reliance on external funding. An analysis of the estimated budgetary receipts indicates that only around 10% of the total allocation came from purely internal revenue, with the majority derived from central assistance and market borrowings. This dependence carries both economic and political implications.
Furthermore, the allocation of expenditure raises questions about the state's development priorities. Estimated budget expenditures remain heavily skewed, with approximately 76% allocated to non-developmental activities, leaving only 24% for crucial developmental initiatives. Crucially, out of the total developmental outlay of Rs. 5819.24 crore, the allocation from the state's own resources was a mere 1200 crore. Though an increase from the previous year, over 80% of developmental funds remain dependent on external sources.
Therefore, good governance and accountability must be policy imperatives.
Despite their indispensability, the CAG's State of Finance Report, tabled at the recent Assembly session, casts a stark light on the governance and accountability issues plaguing Nagaland. One pivotal issue is the persistent delay in submitting Utilisation Certificates (UCs). The outstanding UCs of Rs. 252.10 crore as of March 31, 2023, are a glaring example of systemic lapses in monitoring and internal controls.
As noted by the CAG, the backlog not only violates financial rules but also raises serious concerns about the misappropriation of funds. Most importantly, the inability to verify the proper utilization of grants jeopardizes transparency and accountability, risking the state's eligibility for future central assistance.
These issues directly impact Nagaland's aspiration to become a $10 billion economy by 2029-30, as projected in the Economic Survey 2024-25, which hinges on achieving a compound annual growth rate of 12.55%. While the survey highlighted the State's untapped potential and recent growth trends, the projected target appears overly optimistic, particularly given the historical volatility of the state's GSDP (Gross State Domestic Product).
Apart from the persistent issue of delayed UC submissions, which creates financial uncertainty and hinders the efficient allocation of resources, unemployment, particularly among the youth and educated population, remains a perennial issue. The Economic Survey emphasises the potential demographic dividend of youth, but unemployment among these cohorts have remained consistently high in recent years.
Harnessing the potential requires not just job creation, but also a focused effort on improving the quality of education and aligning it with the needs of the evolving economy. Furthermore, the State must address the infrastructural challenges that could hamper its growth plans. While Nagaland is rich in natural resources, their effective utilisation necessitates adequate infrastructure for extraction, processing, and transportation. Moreover, as economic growth cannot be sustained without a healthy workforce, improving healthcare infrastructure and access must form integral components of Nagaland’s development strategy.
The budget announced several initiatives, such as the Nagaland Skill Mission and the Nagaland Tourism, Hospitality and Transport Scheme, targeting youth employment, as well as the introduction of the Nagaland eProposal System (NePS) and RFID-based e-way bills for greater transparency and efficiency. However, these measures must be accompanied by a concerted effort to address the root causes of financial mismanagement and engender accountability.
Ultimately, Nagaland's economic progress hinges on good governance. This entails not just financial prudence and accountability, but also a commitment to improving human resource development, social indices and inclusive development.
For any feedback, drop a line to jamir.moa@gmail.com
