Budget deficit syndrome

 Nagaland continues to grapple with accumulated deficits which are a burden that have to be tackled otherwise the state could land itself in dire financial straits. Successive governments have failed to cap the figures down within manageable limits. Budgetary figures are mostly continuation of the previous budget with some changes. The state budget for 2020-21, which was presented to the assembly by chief minister Neiphiu Rio, who also holds the finance portfolio, put the estimated deficit for 2021-22 at Rs.365.33 crore and   with the negative opening balance of Rs.2314.13 crore, the financial year 2021-22 will close with an accumulated deficit of Rs. 2679.46 crore. This means that Nagaland will have to raise an additional amount of a little over around Rs.200 crore every month to close the gap by the end of the new financial year. How this is possible can only be a matter of speculative debate. The understanding of proper budgetary management is the saying that one should cut one’s cloth according to one’s size. In other words, the expenditure should not exceed the income beyond a certain manageable limit. However, there is no political will at enforcing fiscal discipline and so the Act remains on paper. Part of the problem is that handling of the finance portfolio seems to be confined to getting and spending money. However the ‘getting’  is mostly from the Centre and spending is in haste but repentance at leisure especially when there is very little scope for raising internal revenue income. The political will needed to effect meaningful austerity was also buried when, despite mounting financial crisis, successive governments continued to focus on spending with an overdrive on construction projects. Opposition leader T.R.Zeliang described the 2021-22 budget as “contract-oriented” on the ground that a substantial portion included allocations for construction of office buildings and other infrastructural projects. Huge funds have been allocated or borrowed to construct palatial office buildings for creating “an ambient environment” so that the government servants can work more efficiently. However, the budgeted amount for projects invariably shoot up even up to over 100% the original estimates. Raising taxes is also not going to create any dent unless there is fiscal discipline and judicious use of funds and so not exactly a do-able solution. Creating more departments in the past came at great cost but it would have been justified had it improved governance. A state with hardly 20 lakh people has over 1,24,000 employed officially and more unofficially, has to spend nearly 60% of the budget for salaries and maintenance. The 13th Finance Commission of India had pointed out that Nagaland should spend only 35% of its budget towards salaries of government employees. The fundamentals of economic infrastructure such as power, roads, telecommunications, municipal services etc. is another area where the State will need to play a continuing role. Austerity measures cannot be achieved merely by announcing them.  The state government should have set targets on all government departments with quarterly review on how much has been saved instead of how much has been spent. It is also time to stop blaming the  IXth Finance Commission for change in funding pattern   or the excuse of being a welfare state that demands reckless spending. It is time to realize that the entitlement syndrome has to go so as to bring accountability in all spheres to usher progress.