Nagaland annual deficit budget projected at INR 1,652.64 crore

INR 127.11 crore spent on Covid-19; chief minister says financial position may worsen in coming months

Our Correspondent
Kohima, June 15 (EMN): Chief Minister Neiphiu Rio has laid out the financial position of the state, including the income from the state’s resources and the Centre, as well as the expenditures so far, and the measures taken to mitigate the financial crisis.

He said that the state government has spent an amount of INR 127.11 crore to fight the Covid-19 pandemic till date. The chief minister said this during a press conference in Kohima on Monday.

Out of the amount spent, INR 24.75 crore has been received from the Central government, INR 99.42 crore spent from the state’s resources, and INR 2.95 crore from the Chief Minister’s Relief Fund.

The state government has been providing financial assistance to stranded citizens, bearing the cost of bringing them back home and keeping them in quarantine centres. In addition, the government had to prepare quarantine centres by repairing and furnishing them. Expenditure has also been incurred in providing facilities such as BSL labs, TrueNat testing machines, ventilators, medicines and personal protection equipment to the health and frontline workers.

“But the process is far from over. The fight against the pandemic has just started, and with rising instances of positive cases, we will have to invest more in health infrastructure and related activities to ensure that the spread of this pandemic is contained to the quarantine and isolation facilities,” he said.

Due to the lockdown and its negative impact on all economic activities, the state’s revenue has also been deeply affected, the chief minister pointed out.

In April 2020, Nagaland collected an amount of INR 21.28 crore as against an average monthly receipt of INR 109 crore during 2019-20. Tax collections during June 2020 have risen to INR 69.65 crore. However, this is still far below last year’s levels, and will have a deep negative impact on the state’s resource position during the current financial year, he said.

The aggregate monthly revenue receipts from the revenue deficit grant, share of central taxes and own revenue stands at INR 679.66 crore.

According to the latest estimates, the aggregate monthly revenue expenditure is INR 817.38 crore, including expenditure on salaries, pension, interest payments, and other recurring expenditure (purchase of power, running NST buses etc).

The actual financial position of the state is the monthly shortfall of INR 137.72 crore and the annual deficit is INR 1652.64 crore.

The chief minister said that this may go further if Covid-19 continues and lockdown and restriction of economic activities continue. “The financial position may further decline as we spend own budgeted amount to fight against the pandemic in the coming months until situation stabilises,” he added.

However, he assured that the government has taken steps to address and mitigate the crisis through its various austerity measures. It is most likely that the activities of the state government during 2020-21 will be centred on Covid-19 pandemic and relevant activities, Rio said.

He added that the state has no collection of duties, import and export, or GST and the Centre is “very kind to us” and has assured that it will continue to support the state with the share of central taxes.

In addition to the above expenditure, the state government has also, through the department of Labour, extended assistance of INR 2000 to 19,046 construction workers from the cess fund to protect them from the impact of economic disruption due to Covid-19. The total amount of assistance extended comes to INR 3.80 crore, Rio added.

The main receipts of the state are the revenue deficit grant and the share of central taxes and duties. ‘We receive the revenue deficit grant because as the name itself says, we are in revenue deficit even after the awards. So in order to reduce the gap of deficit in resources to meet revenue expenditure, the revenue deficit grant is given,’ he said.

For the year 2020-21, the 15th Finance Commission has recommended revenue deficit grant of INR 326.42 crore each month to the state. “This is a fixed amount and does not change,” he clarified, adding that it is ‘not for coronavirus, as assumed by many people’.

Since it is meant to meet the shortfall in expenditure relating to salaries, pensions, debt servicing etc., there is no scope to divert this grant for other purposes, he clarified. In fact, this grant does not fully cover shortfall in revenue expenditure and so, a deficit in resources still remains even after this grant.

Rio pointed out that citizens of Nagaland are privileged as they don’t pay taxes. He said that the share of central taxes and duties is given to each state based on the formula worked out by the commission, which includes parameters such as geographical area, forest cover, population and income distance.

While the Union budget of 2020-21 has projected an amount of INR 4493.37 crore as share of central taxes and duties for Nagaland to be released in 14 equal instalments, the actual receipt is much less at INR 263.80 crore which, is being received in 14 equal instalments, he said.

Since the state’s budget is prepared based on the figures reflected by the central government in its budget, this will leave the state with a shortfall of INR 800.17 crore by the end of the year at current levels of receipt. However, there is possibility of receipts under this head further reducing since it is based on actual tax collections of the central government. With tax collections deeply affected by the Covid-19 pandemic, it is possible that reduced tax collections in the current financial year may result in further reduction of receipts under this head.