Moa Jamir
Two documents having great implications for the state of affairs and developmental parameters of the State were presented on the ongoing session of the 13th Nagaland State Assembly on March 22. While documents are highly contrasting in nature and scope, certain parallels can be drawn.
The first is the annual State budget for the 2022-23 financial year which Chief Minister Neiphiu Rio, who also holds the finance portfolio, presented before the legislature.
As usual, the ensuing financial year starting April 1, is estimated to close with a deficit of Rs 2212.74 crore, down from the revised estimate of Rs 2363.04 crore in 2021-22.
The Chief Minister highlighted, on a positive note, an increase in the State’s share of Central Taxes and State’s own revenues for the estimated current transition surplus of Rs 150.30 crore.
He also underscored that the recurring huge deficit was accumulated over the years, while the impact of COVID-19 pandemic in the State Share of Central Taxes and Duties had seriously affected the State’s financial health.
Despite the situation, he pointed out that the State government was able to allocate an amount of Rs 775 crore for the State Development Outlay of 2022-23, a 10.71% increase over last year.
The outlay for 2021-22 was Rs 700 crore. Austerity measures implemented by the State Government were also prominently highlighted in the CM’s budget speech.
One way to holistically analyze and know the actual state of financial health is to look at how the government is getting its money and spending it – in others words, the receipt and expenditure side of the budget.
For instance, on the receipt side, apart from the State’s own Tax and Non-Tax Revenue as well as Share in Central Taxes, the bulk of the amount were Central Assistance (Grants & Loans) and Internal Debt - loans from lenders including advance credits from the Reserve Bank of India (Ways and Means Advances).
Or out of total estimated receipts of Rs 24389.80 crore, over 73% (Rs 18033.38 crore) were from Central Assistance and Internal Debt, most of which the State has to return in the future.
Accordingly, on the expenditure side, out of the estimated total expenditure of Rs 24239.50 crore, over 33% or Rs 8014.18 crore are for repayment of the loans (Servicing of Debt), including settlement of WMA.
On the other hand, despite austerity measures, non-development expenditure increased from Rs 9316.15 crore in 2021-22 to Rs 10410.19.
Thus, out of the total estimated expenditure of Rs 24239.50 crore in the financial year 2022-23, over 76% or a total of Rs 18424.37 crore is spent without creating any new asset for the State.
The Development Expenditure, including centrally sponsored schemes, was just around 24% of the total estimated expenditure.
Apart from the bulging deficits, it suggests the State, high on debt and surviving on borrowing from others, so far seems to be clueless on curtailing the same.
Such state of affairs underscores the importance of taking the second document “State Finances Audit Report” of the Comptroller and Auditor General of India relating to the Government of Nagaland for the year ended March 31, 2020 laid down on the floor of the NLA on the same day.
Among others, the report observed that increasing revenue expenditure in increasing, capital expenditure was decreasing in the assessed period. Similar observations were made on previous reports.
The CAG, thus, suggested the State Government needs to give greater focus on development expenditure by steadily increasing its Capital expenditure on identified infrastructure gaps in a planned manner with periodical review and monitoring mechanism at the highest level of administration.
It also called for ensuring that the mobilised debt resources are used adequately for incurring capital expenditure for the creation of assets or in other words for developmental activities.
The increasing trends of revenue expenditure must be corrected by identifying potential wasteful expenditure and adopting economic measures across departments, it added.
Again, monitoring of projects is shown to be highly lax. As of March 2020, the CAG noted that 104 Utilisation Certificates (UCs) worth Rs 378.59 crore were due for submission for periods pertaining to 2018-19.
Apart from the violation of prescribed financial rules and directives, the high pendency of UCs is fraught with the risk of misappropriation of funds, the CAG stated.
A State getting 73% of its financial resources either by borrowing or central assistance, coupled with high indebtedness cannot afford such laxity. Those at the helm of affairs need to get their act together in ensuring not only ramping up the mobilisation of resources without liabilities but also checking its leakages.
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