It did not come as a surprise when the chief minister of Nagaland presented a tax-free deficit budget for the financial year 2023-2024 during the just concluded first session of the newly formed government, as that has been the trend for a few decades now. However, what came as a respite for the public was the narrowing of fiscal deficit gap. A look at the accumulated fiscal deficit over the last five years showed that there has been more gain than loss in terms of the state’s financial health, though the pace is slow. The deficit budget estimates for the FY 2019-20 was about INR 1611 crore, down from previous year’s INR 1630 crore (revised estimate INR 1661 crore) but the revised estimates of the fiscal year spiraled to INR 2234.85 crore due to the outbreak of COVID-19 and the subsequent lockdown that paralysed business activities and normal life for months together. The accumulated deficit increased during the FY 2020-2021 and 2021-22, which the government attributed to the pandemic, despite spending less than the budget estimates. However, the FY 2022-2023 saw a significant improvement in the deficit at about INR 1334 crore, down from previous year’s closing deficit of INR 2363 crore. For the current fiscal year, CM Neiphiu Rio on Monday presented a deficit budget of INR 1374.17 crore (compared to previous FY’s budget estimate of INR 2212.74 crore), which is the lowest in six years. Going by the trend over the last three years, people will expect the ruling dispensation to narrow the state’s fiscal deficit further by cutting down unnecessary spending and boosting revenue. This is vital for economic growth of the state and to alleviate over dependency on the central government.
In terms of fund allocation from the annual development outlay of INR 820 crore (against INR 775 crore in FY 2022-23), more focus has been given to sectors like rural development, agri and allied, energy, industries and minerals, transport, science and technology, general economic services, and social services. The fund allocation looks impressive, considering the state’s meager revenue, but at the end of the day, it will boil down to how judiciously it is utilised by various departments. One area the government should check is utilisation of funds earmarked for various departments, including the outlay for centrally-sponsored schemes (CSS), as underutilisation of these programmes had cost the state big in the past. There has to be a mechanism in place to ensure that various departments move the files on time to avail central schemes, as the state is now required to release its share within 30 days of receiving funds from the Centre, failing which a penalty of 7% per annum on the amount received will be imposed. The government should also work on improving its financial position by maintaining transparency, preventing leakage of public funds and finding ways, including oil exploration, to boost revenue. This will kill two birds with one stone — solve fiscal deficit issue and reduce dependency on the Centre. The state’s development outlay will also increase with improvement in economic health.
