Nagaland Budget 2024-25: A Mixed Bag

Moa Jamir

‘People-centric’ but dependency persists

Nagaland Chief Minister Neiphiu Rio, the Minister-in-Charge of Finance, termed the State Budget 2024-25 as "a real people-centric budget." Addressing a press conference after the presentation on February 27, he highlighted that, apart from infrastructure development, investment promotion, entrepreneurship development, and local economic rejuvenation, it introduces a welfare measure - the Chief Minister’s Universal Life Insurance Scheme, to be fully funded by the State Government.

The State's economic picture, as shown in the annual 'Statement of Estimated Gross Receipts and Expenditure,' offers some optimism but also highlights ongoing issues that demand attention to ensure financial stability and continued development.

On a positive note, the estimated gross receipts are expected to increase by over 3%, from Rs 23,145.66 in 2023 (BE) to Rs 23,978.05 in 2024-25. Likewise, gross expenditure is set to increase from Rs 23,085.66 crore in 2023-24 to Rs 23,727.88 crore in 2024-25, or by approximately 2.78%, with a substantial increase in developmental expenditure from Rs 4268.63 crore to Rs 5611.87 crore.  While the developmental expenditure includes funds received from the Union Government under Centrally Planned Schemes (CPS)/Centrally Sponsored Schemes (CSS), etc., it is significant. 

One notable feature of the budget in the last two years was the substantial cut in accumulated budget deficit, which decreased from Rs 2212.74 crore in 2022-23 to Rs 1374.17 crore in 2023-24 (BE). The revised estimate further put the deficit at Rs 878.57 crore. Besides, the State's Own Tax and Non-Tax Revenue are also expected to increase from Rs 1950.56 crore in 2023-24 to Rs 2250.05 crore in 2024-25. This is cited as the main reason behind the fall in accumulated deficits in recent years.

The expected internal debt is also projected to decrease substantially from Rs 7,330.91 crore in 2023-24 to Rs 5905.82 crore in 2024-25, while the State’s share in Central Taxes is also set to increase (from Rs 5812.05 crore to Rs 6940.56 crore).

However, it also reflects a huge dependency on Central Assistance (Grants & Loans) with over Rs 8,880.11 crore. On the expenditure side, while developmental spending has increased, the non-development expenditure has also increased concurrently, from Rs 11,491.76 crore in 2023-24 to Rs 12163.90 crore in 2024-25. While falling internal debt, the servicing of debt is also expected to decrease from Rs 7325.27 crore from the last fiscal year to Rs 5611.87 crore this year.

Overall, however, the statement indicates that still over 90% of the gross total receipts of the State government come from outside. Even if the State’s Share in Central Taxes is included, still over 61% of the gross receipts are from external sources with further liabilities. On the other end, nearly three-fourths (over 74%) of the State’s annual projected spending is attributed to non-development or expenses which do not directly create any assets or aid in economic growth. Interest payments and debt servicing, salary and pension expenditure, etc., are components of the non-development expenditure.

Yet, the statement highlights that over 90% of the State government's gross total receipts come from external sources. Even with the State’s Share in Central Taxes included, more than 61% of gross receipts are from external sources. Furthermore, non-development expenses, accounting for over 74% of the annual projected spending, pose a challenge to asset creation and economic growth.

Accordingly, the Nagaland budget reveals a persistent pattern of high external dependency and low own revenue, impacting developmental activities and economic progress. Addressing this challenge requires a concerted effort by those in leadership positions to plug leakages, mobilise internal resources, and control non-development expenditure for sustained economic growth.

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