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Nagaland heading for financial crisis

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Govt has so far spent Rs 127.11 cr to fight COVID-19: CM
Kohima, June 15: The Government of Nagaland is heading for financial crisis despite austerity measures being formulated to augment the resources amidst economic meltdown.
Addressing a press conference in the Secretariat conference hall Monday afternoon, Chief Minister, Neiphiu Rio said the State is heading for financial crisis due to poor revenue collection and diversion of budgeted funds for combating novel coronavirus.
Rio said so far the Government has spent Rs 127.11 crore to fight the COVID-19 pandemic. “Out of this an amount of Rs 24.75 crore has been received from the Central Government, Rs 99.42 crore has been spent from the State’s own resources and an amount of Rs 2.95 crore from the Chief Minister’s Relief Fund,” he said.
The CM said the main receipts of the State are the Revenue Deficit Grant, and the share of Central taxes and duties. The State received the Revenue Deficit Grant because as the name itself says “we are in revenue deficit even after the awards”. So in order to reduce gap of deficit in resources to meet revenue expenditure, the Revenue Deficit Grant is given, he said.
For the year 2020-21, the 15th Finance Commission has recommended Revenue Deficit Grant of Rs 326.42 crore each month to the State. This is a fixed amount and does not change, he said adding since it is meant to meet the shortfall in expenditure relating to salaries, pensions, debt servicing, etc, there is no scope to divert the grant for other purposes as is being misunderstood by some people. Also, this grant does not fully cover shortfall in revenue expenditure and so, a deficit in resources still remains after the grant, he said.
On share of Central Taxes and Duties, the Chief Minister said while the Union Budget 2020-21 has projected an amount of Rs 4493.37 crore as share of Central Taxes for Nagaland to be released in 14 installments the actual receipt is much less at Rs 263.80 crore which is being received in 14 installments.
“Since the State budget is prepared based on the figures reflected by the Central Government in its budget, this will leave the State with a shortfall of Rs 800.17 crore by the end of this year at current level of receipt,” he said. However, he said there is possibility of receipts under this head further reducing since it is based on actual tax collections of the Union Government.
“With tax collections deeply affected by the COVID-19 pandemic, it is possible that reduced tax collections in the current financial year may result in further reduction of receipts under this head,” he said.
Rio said as in the case of Revenue Deficit Grant receipts under this head go to meet revenue expenditure on salaries, pensions and debt servicing etc, so the scope for utilizing this receipt for other purposes does not arise.
On State’s own revenue, Rio said due to lockdown and its negative impact on all economic activities, the revenues of the State were badly affected. During April, the State could collect Rs 21.28 crore against an average monthly receipt of Rs 109 crore during 2019-20. Following the partial relaxations in May tax collections during June has risen to Rs 69.65 crore.
‘COVID-19 cess’
Briefing on revenue on COVID-19 cess, Rio said his Government took a considered decision to levy COVID-19 cess following a preliminary assessment of the levels of expenditure that would have to be incurred, especially considering the need to build up health infrastructure and procurement of machinery and equipments including protective items and medicines. But the cost of meeting the actual needs have far exceeded what was initially estimated, he maintained.
The chief minister said since the Government was aware of the huge deficit impact the pandemic would have on the State, it was decided to raise some extra resources from the petroleum sector. It is one of the few areas that remains outside the purview of GST and within the domain of the State. He said the amount collected from COVID-19 cess was Rs 0.24 crore in April and Rs 3.36 crore in May. The estimated collection for the financial year 2020-21 is Rs 37.25 crore.
“In fact the coming months will continue to see significant expenditure in the transportation of returnees, feeding expenses, purchase of equipments and medicines, cost of completion of BSL labs and purchase of equipments and consumables for the labs and investments that would require to be made in the district hospitals to facilitate them to deal with increasing number of positive cases. Also there are other frontline agencies who are incurring heavy expenses in their activities.”
He said Government has proposed austerity measures and that decision has been taken to reduce Government expenditure such as freezing fresh appointments,15% cut in selected items of expenditures such as travelling entitlements, office expenses, motor vehicles and maintenance, freezing of dearness allowances and dearness relief during 2020-21 and pro-rata cut of 15% in the State’s own developmental expenditure.
“The State Government is doing all that is possible for our people returning from outside. In fact the State Government machinery has been fully engaged since April 2020 in preparations for their return, in managing the logistic of their movement and management of the quarantine facilities with all expenses borne by the government along with the support of the churches and the civil society organizations,” Rio said.
The Chief Minister said in order to provide support and handholding in locating job opportunities and to meet the training and skill requirement of returnees as well as to keep track of people going out of the State, the Government has decided to set up a special cell in the Labour & Employment Department. (Page News Service)