Runaway deficits

Nagaland Chief Minister Neiphiu Rio presented the budget outlay of 23727.88 crore for the financial year 2024-25, with an estimated accumulated deficit of 905.78 crore rupees. It may be recalled that the deficit for the preceding financial year ending 2023-24 was to close with positive balance of Rs.150.30 crore. In the budget for 2022-23 the deficit was Rs 1,067 crore while the deficit for 2021-22 was Rs.365.33 crore.Successive governments have failed to cap the figures within manageable limits. Budgetary figures are mostly continuation of the impact of previous budget with some changes. With the deficit of Rs.905.78 crore estimated by the end of the financial year 2024-25 the state will have to tackle the matter in order to ensure that development projects are not bogged down owing to lack of funds. How the state government plans on closing the deficit and raising some tax in order to net more revenue. How this is possible can only be a matter of speculative debate.

Huge funds have been allocated or borrowed from financial lending institutions to construct palatial office buildings in order to create “an ambient environment” so that the government servants can work more efficiently. However, the budgeted amount for projects invariably shoot up even up to 100% the original estimates. The understanding of proper budgetary management is the saying that one should cut one’s cloth according to one’s size . The political will needed to effect meaningful austerity has been buried when, despite mounting financial crisis, successive governments continued to focus on spending with an overdrive on construction projects.Ironically, current deputy chief minister T.R.Zeliang who was the NPF legislature party leader and opposition leader, 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.

A state with hardly 20 lakh people has over 1,40,000 employed and the number continues to grow. The 13th Finance Commission of India had pointed out that Nagaland should spend only 35% of its budget towards salaries of government employees. This meant that Nagaland has over 70,000 excess employees. This was a major reason for the deficit that has plagued Nagaland since the 90s. Creating more departments in the past came at great cost but it would have been justified had it improved governance. 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. The only way out for the government is to explore extraction and exploitation of natural resources such as coal, gas and oil. The first experiment with NPNG Regulations 2012 ended in a fiasco as the Centre then under UPA and now under NDA, isn’t likely to permit enactment of laws for oil and minerals independent of the constitutional framework. However, that is not a problem as the state government has to prepare a transparent blueprint for exploitation of natural resources and financial benefits to the landowners and the state government. It is also time for the enlightened to raise their voices against camouflaging corruption under various affiliations which are being accepted and legitimised.