Al Ngullie
Morung Express News
Dimapur | March 12
The Reserve Bank of India (RBI) has cautioned deficit-friendly Nagaland that the State needs to reduce her fiscal deficit to 3% of the Gross State Domestic Product (GSDP). Special category states could incur a fiscal deficit of 3% in current fiscal 2011-2012 and possibly “maintain” the figure from there on, the RBI said.
The State-wise Analysis of Fiscal Performance of 2011 by the RBI says that Nagaland –among a couple of other states – needs to reduce her fiscal deficit to 3% of the GSDP by the year 2013-2014. Manipur, Sikkim and Uttarakhand are three others who are sharing the same caution from the RBI.
The report sets a cautionary tone for possible reactions that could come in response to Nagaland’s Budget for 2012-2013 to be presented by the State’s chief minister, Neiphiu Rio, on March 15 during the budget session, which commenced today. The CM, also the Finance minister in-charge, is touting a “full budget” with a compound increase of 10% – around Rs. 2000 crore for year 2012-2013 from the Rs. 1800 crore of 2011-2012. All rejoicings aside, , the RBI report sufficiently implies that Nagaland being a no-revenue state seriously requires a drastic paradigm shift in internal revenue generation or the deficit would pull her down the finances scrap yard.
“All special category States with base fiscal deficit of less than 3 per cent of GSDP in 2007-08 could incur a fiscal deficit of 3 per cent in 2011-12 and maintain it thereafter. Manipur, Nagaland, Sikkim and Uttarakhand should reduce their fiscal deficit to 3 per cent of Gross State Domestic Product (GSDP) by 2013-14,” the study of Reserve Bank said.
This is for readers to note that GSDP is the total market value of all final goods and services produced within a State in a calendar year. GSDP is also considered the sum of value in every stage of production of the final goods and services produced within a given period of time, and then given a monetary value.
The RBI said that all non-special category States accordingly would need to achieve a revenue balance by 2011-12. “Of the 11 special category States, different fiscal adjustment paths have been suggested for six States, viz., Jammu and Kashmir, Manipur, Mizoram, Nagaland, Sikkim and Uttarakhand.”
Even though the States have shown “some commitment towards fiscal correction” as reflected in the budgeted key fiscal indicators of 2010-11, RBI said, “Its sustenance would largely depend on how macroeconomic conditions evolve in the medium term.”
The report also gave associated details concerning expenditure receipts and deficit Indicators of state governments. “In 2009- 10 (RE), the revenue account position of Assam, Mizoram, Nagaland, Tripura and Uttarakhand was adversely affected; in fact, Assam and Uttarakhand showed a revenue deficit as against a revenue surplus position in 2008-09 (Accounts). In total, only eight States were able to achieve revenue surplus in 2009-10 (RE) compared with 10 States in 2008- 09 (Accounts).”
The report also said that in terms of GSDP, VAT (Value Added Tax) collections were highest in Jammu and Kashmir while Nagaland recorded the lowest collection in 2009-10 (revenue) among the special category States. The full report is also made available for download from the RBI’s website.
