Nagaland Budget Tightrope
After being caught in the deficit trap for years, thanks to reckless spending by successive governments, the incumbent government of Nagaland seems to be making a concerted effort to get out of this mess.
- After being caught in the deficit trap for years, thanks to
reckless spending by successive governments, the incumbent government of
Nagaland seems to be making a concerted effort to get out of this mess. This is
what the state’s budgets over the past few years indicate. Last week, Chief
Minister Neiphiu Rio presented an estimated deficit budget of INR 843.21 crore
(outlay increased by 18 per cent over the previous year) for the financial year
2025-2026, which is the lowest in eight years, a marked improvement from the
INR 2212.74 crore deficit budget in 2022-23, INR 1374.17 crore in 2023-24, and
INR 905.78 crore in 2024-25. This consistent improvement, however small it may
be, is something to cheer about because good fiscal health is imperative for
long-term sustainable economic growth. The state government has to walk a
tightrope in terms of fund allocation for various sectors due to financial
crunch. There is so much to do, from road infrastructure development to
education to health sectors, with limited resources to spend. So, for a
revenue-starved state like Nagaland, it is important to use the limited revenue
judiciously without affecting the fiscal health. The state is currently paying
the price for years of uncontrolled spending. The state government has been
unable to significantly hike the outlay for developmental activities in its
budgets for consecutive years due to the financial stress caused by accumulated
deficit fiscal. For instance, the gross receipts for this financial year is
estimated to be more than the expenditure if not for the negative opening
balance of INR 905.78 crore (from 2024-25 financial year).
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- A look at this year’s budget shows that, as usual, a chunk
of the state’s expenditure will go towards non-developmental aspects, especially
salaries of government employees and pension. While the budget touches on
almost all sectors, the move towards skilling the youth, modernisation of
public transport infrastructure, introduction of the Chief Minister's
Fellowship Programme, development of roads and bridges, and plans to enhance
sports infrastructure across the state have caught the attention of many. Amid
an acute power crisis, the state government has also announced subsidy for the
installation of rooftop solar systems besides upgrading several sub-stations
through the Nagaland Solar Power Mission. This initiative has the potential to
not only solve the energy crisis but also reduce the state’s expenditure on the
purchase of power. Given the limited resources at its disposal, it will be unfair
to expect so much from the government but two sectors that should have received
more attention are health and education. The government should give more
priority to health and education, especially in rural areas. We can’t afford to
overlook the welfare of the marginalised sections of our society. Most
importantly, the state government should continue to consolidate its fiscal,
which is required to hike fund allocation for welfare and developmental
activities, including centrally-sponsored schemes.
