CM Neiphiu Rio presents tax-free deficit budget of Rs. 1,374.17 cr for 2023-2024

Rio, who holds the finance portfolio, presented the first State Budget with gross receipts estimated at Rs 23,145.66 crore, and gross expenditure at Rs 23,085.66 crore for the financial year

Nagaland Chief Minister Neiphiu Rio on Monday presented a tax-free deficit budget of Rs.1,374.17 crore for the financial year 2023-2024, even as the current year’s transaction for the year 2023-24 was estimated to result in a positive balance of Rs.60 crore.

Rio, who holds the finance portfolio, presented the first State Budget with gross receipts estimated at Rs 23,145.66 crore, and gross expenditure at Rs 23,085.66 crore for the financial year 2023-24.

Rio maintained that Nagaland was fortunate to see an increase in the state revenue receipts both under Share of Central Taxes and Duties as well as the state’s own revenue, to which he said, it has helped the state to discharge a substantial amount of liabilities in the form of Centrally Sponsored Schemes (CSS) backlog as well as Civil Deposit.

Rio, informed the house that the state is seeing an encouraging trend of gradual increase in state revenues in areas like State GST, which he said has increased from Rs.788.37 crore during the pre-pandemic year 2019-20 to Rs.1,092.21 crore during 2021-22. He said, revenues from the Coal sector have also seen an increase from Rs.53 lakhs during 2019-20 to Rs.2.03 crore during 2021-22 and as per the latest details furnished by the department during the current financial year, it has already reached Rs.5 crore and is expected to cross Rs.8 crore by the end of the current financial year.

Other areas of improvement in performance include the Forest sector which has seen a good increase in revenue from Rs.13.72 crores during 2019-20 to Rs.19.06 crore during 2021-22, said Rio. However, despite these encouraging trends, the state revenue still accounts for onky 12.36% of the total revenue receipts which, the Chief Minister said is barely sufficient to cover the State salary expenditure for two and half months. This is mainly because we have a small tax base, he added.

Further, Rio stated that the State will be adversely impacted by the yearly reduction in the Revenue Deficit Grant recommended by the 15th Finance Commission.

He said, “Over the 5 year period of the award from the year 2020-21 upto 2025-26, the Revenue deficit Grant will reduce by an amount of Rs.910 crore.It appears that the Commission has taken this to pressurize the State to cut down its revenue expenditure, especially on salaries unusually huge amount of resources we spend on payment of salaries has been viewed critically by almost all the Finance Commissions.”

Given these circumstances, the Chief Minister stressed the urgency for the State to look into all potential areas of revenue generation, streamline collection systems and plug all areas of leakage.

Highlighting some of the measures the state government had taken, Rio said measures such as the introduction of PIMS and e-PayBill have already put a huge check on “ghost employees” and “illegal appointments” that were rampant in the past. Further, it has also put an end to the misuse of salary provisions in the budget by departments.
“Now unless an appointment goes through proper process, no salary will be provided. This will also help the State Finance Department to be more accurate in providing salary provisions to each department,” informed Rio.

He also informed that another important initiative in the pipeline is the integration of the Grade-IV GPF with e-PayBill which is nearing completion.

“Till now, the keeping of GPF accounts of Grade IV employees of the State Government were completely at the discretion of the DDOs. As a result, the State government was unable to ascertain how much has been deposited, how much was withdrawn and what is the balance. Once completed and linked with PIMS and e-PayBill, this element of uncertainty will be completely removed,” added Rio.

He also informed that the State is moving to computerise the State Pension Sector taking advantage of the registrations being made for the Chief Minister’s Health Insurance Scheme which, he said will help to remove bogus and doubtful pension payments. Adding that this is urgently required considering the fact that the total pension expenditure for the year 2021-22 stands at Rs. 2158.67 crore, which is a heavy burden on the State Exchequer.

Highlighting the losses incurred by the state, Rio stressed the need for the state to take measures to reduce the losses in the Power sector.

The department has so far collected Rs. 260.64 crores upto the month of February 2023, out of which Rs. 68.58 crore is from power trading. The amount spent on power purchases up to January 2023 was Rs. 448.12 crores. By the end of the current financial year 2022-23, the amount spent on power purchases is estimated to reach Rs. 580.89 crores while revenues may barely touch Rs. 280 crores. The last four years have witnessed a total loss of Rs. 1079.74 crores in the power sector. Such losses are unsustainable, and require urgent corrective measures, said Rio.

Another loss-making sector is NST, said Rio, informing that against the amount of Rs.12.64 crore spent on fuel alone, the department was able to collect revenue of Rs. 6.50 crore only.

Although the government provides bus services to the interior areas for the benefit of the public, such levels of losses cannot be sustained over a prolonged period, he said, adding that these are areas where the state needs to reduce losses and improve efficiency.

The Chief Minister also emphasized the need to bring down unnecessary expenditures and practice austerity in the functioning of all departments. In this connection, he called upon all departments collecting taxes, cess, royalties, and fees to offer the facility of online payments to their customers, especially in places where there is good mobile connectivity. This will increase transparency, reduce delays and prevent misappropriation, he added.

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