Our Correspondent
Kohima | March 24
Nagaland Chief Minister, Neiphiu Rio today claimed that despite many difficulties; the state’s finances have been well managed over the past years. Rio, who also holds finance portfolio, stated that the DAN government had never failed to pay salary and pension in time and has not defaulted in servicing of debt. “I can safely assure that the state finances will continue to be managed as efficiently as has been done during the past years,” Rio said at the NLA session here today.
On the other hand, Rio noted that since 1989, the Government of India has discontinued funding pattern, which used to cover all non-plan gaps of the respective year, as was expected in terms of the provisions of the 16 Point Agreement. Consequently, the financial problems of the state started from 1990, he said.
However, Rio said that the DAN government, after it took tenure, “was able to solve all those problems.” He also informed that Nagaland is one of the best states in the country in the area of repayment of debt to financial institutions in time.
The 13th finance commission fixed the ceiling on the state’s salary payment at 35 % of the total revenue expenditure, excluding pension and interest payments, despite the fact that the state’s expenditure on salary was already around 60%.
Consequently, Rio said that the state government would have to retrench 46, 599 employees. He however added that the government did not resort to such measures and stated that “we are still maintaining our salary expenditure around 60%.” “Going on the basis of the 13th finance commission, we have presently an excess of 54, 689 employees,” he informed.
The assessments made by the 13th finance commission are as follows: Salary - Rs. 5049.99 crores, pension - Rs. 815.30 crores and others - Rs. 447.57 crores.
Rio disclosed that the imposition of cash drawdown by the Planning Commission is a major factor for the negative state of the state’s finance. This method took into account the artificial cash balances shown against the balance of the state on the last day of March, as an available resource of the state for the state plan. This was done without recognizing the fact that it was unreconciled by RBI.
Rio stated that, in fact, by the last day of March the state’s cash account is always in negative. The positive balance shown was mainly on account of inability of RBI to reconcile accounts due to heavy financial year ending transactions of all states. “As a result, we were penalized for resources that did not exist.”
Rio informed that the government has adopted preventive measures to tackle this problem by closing the financial year effectively a few days ahead, so that the actual cash position is established on or before 31st March.
While appreciating GoI for providing more than 90% of the state’s resources compared to its own resources, which come less than 10%, Rio informed that for the last 53 years, the total money received by the state for developmental purposes Rs. 15, 999 crores. Rio lamented that the amount provided to Nagaland since statehood for developmental purposes is less than a year’s plan outlay of a medium sized state in the country.
He further stated that during the 50th year of statehood, the plan outlay for the current year 2013-14 as compared with the plan size of the previous year has in fact being reduced by 13.04%. “But if we are to exclude NEC & NLCPR, the actual reduction comes at about 26%.”
In 2014, out of the total outlay of Rs. 2300 crores, the actual amount released by the GoI was Rs. 1726.85 crores, resulting in a shortfall of Rs. 573.15 crores.
As initiated by the state government at the level of the Prime Minister and Finance Minister, Rio said a decision was taken by the GoI to open a special window of funding to reduce the negative impact of the 13th finance commission recommendations. However, the GoI was unable to provide the SCA untied, as per the BRC, showing a shortfall of (-) Rs. 978.64 crore.
Rio also said the GoI was unable to release the pending reimbursements of the state and as of today, the pending amount stands at Rs. 324.18 crores.
“While we have estimated the closing deficit of Rs. 950.90 crores for the year 2013-14, the actual deficit could have been much less had the pending reimbursements been released to us,” Rio said adding that the deficit has been on the higher side due to less receipt of state share of central taxes and pension reimbursement from the GoI.
Rio said with these two receipts, the actual deficit should have been Rs. 536.20 crores only.
