Nagaland’s Economic Woes and Dependencies

The decision of the Nagaland government to impose Covid-19 cess on petroleum products to meet the financial exigencies arising out of the novel coronavirus pandemic in April this year became a bond of contention as several civil society organisations protested the move, arguing that it would add misery to the already affected public through rise in prices of commodities. The state government on the other hand had maintained that it was inevitable considering the need for more funds to fight the crisis, like setting up of health infrastructure, procuring personal protective equipment, taking up the task of bringing its stranded citizens to the state and establishing dozens of quarantine centres across the state, among others. It also received a great deal of attention from the national media, mainly because of collecting the cess in the name of Covid-19 and not in other forms that several Indian states imposed for the same purpose. On retrospection, it was more chaotic during the initial stage of the pandemic outbreak than now despite the number of cases swelling over the months, as abrupt nationwide lockdown caused untold sufferings to the people, especially the migrants. The situation demanded the state government to implement drastic measures to mitigate the shortfall of funds to fight the crisis that would adversely affect the citizens, and hence the controversial Covid cess. The public was also equally disturbed by the disruption in earnings due to restriction associated with the pandemic and the price rise. In this case, argument in favour of one group would affect the other considering the economy of the state, while there is no denying that the measures taken thus far have benefited the citizens in one way or the other. What needs to be discussed and deliberated now is how to find ways to face such crisis more efficiently in future. This takes us to the economic health of the state.

All countries run on taxes paid by its citizens. India is no exception, and so too its states. While bigger states of India don’t depend much on the central government for funds, unless in times of natural disaster or implementation of big projects, as they have good source of revenue through tax and non-tax revenues including property tax, corporation tax, professional tax, revenue from natural resources, dividends from state public sector enterprises, etc., smaller states like Nagaland are dependent on Centre’s grants-in-aid. With meagre source of income, which is not even enough to meet its administrative cost, economic liability is likely irrespective of the political party that comes to power. And when a big crisis like Covid-19, which shook even the developed economies strikes, it becomes all the more difficult for a consumer state like Nagaland to stand the test without extra help from the citizens. The state government has finally revoked the Covid-19 cess on fuel following public outcry. The move should be appreciated as the government has put citizens’ voice above “necessity” when the fight against the pandemic is far from over. What we should understand is that a state’s economic health and people’s health are interconnected. So, it is vital to decrease dependency from outside the state by increasing production of goods and services. Eventually, citizens will have to pay taxes like their counterparts in other states in the near future, if not now. This will help the government as well as give the citizens the teeth to hold the netas accountable for their policies and actions.