Nagaland Government is contemplating to reduce the fiscal deficit to 3% of Gross State Domestic Product (GSDP) and increase State-level income generation to empower self-sufficiency by 2030.
The State fiscal deficit in Financial Year 2018/2019 was 4.18% breaching the target of 3% of GSDP set by Nagaland Fiscal Responsibility and Budget Management – FRBM (Amendment) Act 2011, stated the Nagaland Sustainable Development Goals (SDG) Vision 2030 document released by Chief Minister Neiphiu Rio recently in the State capital.
The Government by 2030 would focus on improving services, programmes and infrastructure by increasing capital expenditure aligned to Nagaland’s Vision 2030 alongside encouraging intra-state level innovation, technological development and capacity-building, it said.
Nagaland has limited State-level budget availability for capital expenditure which is the primary source of resources being dedicated to infrastructure, social programming and development interventions, it said.
This, in turn, has hampered the State’s ability to invest in development projects delaying the growth and scope of existing efforts and becoming a roadblock for possible new interventions to be implemented effectively.
Therefore, the State must be focused on being more self-reliant by aiming to reduce fiscal deficit, improve services and infrastructure by targeted increase in capital expenditure and converge activities under various Government programmes.
In order to estimate GSDP, the State economy has been divided into primary, secondary and tertiary sectors:
The primary sector involves all occupations that utilise natural resources such as crops, livestock, forestry and logging, fisheries and aquaculture, mining and quarrying. The growth in this sector is estimated to increase to 5.92% in FY 2018/2019.
The secondary sector comprises all economic activities that transform one good to another, mainly taking outputs from the primary sector to manufacture finished goods. The main components of this sector include manufacturing, electricity, gas, water supply and other utility services and construction.
The tertiary sector comprises all economic activities providing services and includes transport, storage and communication, trade, repairs, hotels and restaurants, banking and insurance, real estate, etc. This sector has consistently been the largest percentage contributor to Gross State Value Added (GSVA) at constant prices. This has been possible due to the consistent growth rate of the public administration sub-sector.
However, towards bringing down the fiscal deficit, the Government has identified large-scale challenges that the State needs to address.
High Fiscal Deficit due to increasing expenditure.
Higher capital expenditure due to service public debt must be transformed into greater capital expenditure on capital outlay.
Maintaining that there has been low private sector involvement, the vision document maintained that the idea of developing entrepreneurship is still evolving in Nagaland, although it has great potential to take flight in terms of adding to the GSDP and allowing for greater State-level revenue generation and investment in development projects.
With a rich resource base and talented youth, enterprise development has a huge potential to help solve State-level challenges faced by the people and communities at large.
Pointing to the low level of technological development, the Government opined that it is essential to ensure greater access to technological innovation and connectivity in order to enhance knowledge sharing within the State of best practices and innovations being implemented and planned and allow for improved coordination among existing State mechanisms.
Hence, the Government proposed the need for the State’s building statistical capacities in order to increase the availability of high-quality, timely and reliable data disaggregated by the relevant local characteristics such as gender, age and ethnicity, etc.
There are programmes under the State Government that are intended to create holistic impact but are operating in silos by several Departments, but there is a need for convergence of these activities in order to increase scale and avoid duplication, it said.
Due to these challenges, it is noticed that the GSDP is also growing at a lesser rate, it said while stressing that local advantages especially in the primary sector need to be leveraged and accelerated in order to harness the full potential of these sectors to drive forward and contribute to the State’s economy.
Meanwhile, the strategies proposed by the Government to achieve success by 2030 are:
Reducing Fiscal Deficit: Two primary ways of bringing about a reduction in fiscal deficit are: seeking new ways of State-level revenue generation and reducing expenditure simultaneously. In terms of debt consolidation and reaching targets under FRBM, there is still some scope for Nagaland to reach the 3% level. Innovative revenue raising efforts such as gaining proceeds from mine auctions can be initiated and revenue projections from GST will be accounted for, so as to improve the quality of budgeting. Evaluation of a total view on public sector borrowing requirements including off-budget transactions, borrowings of the public sector undertakings and contingent liabilities will also be accounted for in advance. This would allow better management of the budgets, prior preparation and course-correction while engaging in continuous evaluation of the budget to take all possible efforts for reducing fiscal deficit.
Leveraging Agricultural Produce: While 45% of Nagaland’s population is dependent upon agriculture, we see that the primary sector still accounts for only about 30% of GSVA at constant prices. With the ‘crops’ sub-sector experiencing growth, the right market linkage channels and a structured programme around increase of organic produce will help to increase GSVA, in turn enhancing state-level revenue and self-sufficiency.
Innovative Financing: With the fiscal deficit still not having reached the FRBM target of 3%, revenue generation sources must involve innovative financing approaches in order to reduce the deficit.
The State Government could establish a district to district innovative financing competition which would encourage district administration and village-level machinery to think innovatively. Bringing about healthy competition between different districts and keeping a reward for the same would compel them to engage in thinking creatively regarding how finances can be more efficiently utilised for current programmes and how new sources of financing can be leveraged.
Taking inspiration from the Central Government-owned India Infrastructure Finance Company which is mandated to provide about 30% of project debts while leaving the remaining 70% to be financed by the normal banking system, such a fund to be formulated at the State level so as to finance large long-term projects in specific different ways such as partnering with national and international financing agencies and other State Governments, etc.
The Government has proposed district-level innovation labs could be set-up that may be led by local youth in order to generate fresh ideas that are locally relevant. Innovative ways in which expenditures can be cut down and new revenue generation streams can be created must be the thrust of such labs.
Innovations: Apart from innovative financing mechanisms for long-term investments, embedding innovative best practices that allow for effective implementation of scalable and sustainable programmes is the way forward. Imbibing aspects of global, national and regional innovations and making them more locally relevant is of key importance. The State Government will take the lead to create a system whereby there is greater knowledge sharing of innovative initiatives and effective programme implementation in order to achieve the SDGs. There are several innovative partnership-based sustainable models in the fields of education, healthcare, livelihood generation that the Nagaland Vision 2030 document includes across the respective sections relating to the relevant goals.
Public-Private Partnership: Nagaland has a huge infrastructure deficit and to plug that gap, alongside ensuring that the state is more self-sufficient, the public-private partnership (PPP) model could be an effective way. There are several types of PPPs such as ‘Build-Own-Operate’ (a user-fee based model), ‘Build-Design-Finance-Operate-Transfer, Build-Own-Operate-Transfer and Build-Own-Transfer. Indeed, the State has a lot more potential for uptake of PPP projects.
Some of the ways in which such projects could be encouraged include – Increase Ease of Doing Business Ranking; Setting-up a State Infrastructure Investment Fund to specifically channelise private sector funds for PPPs at the State level; Formulate Guidelines for PPP Models.
Convergence of activities under the Government: Cross-departmental interaction to be encouraged through workshops and brainstorming sessions to understand the possibilities of convergence of the various activities under the different Government programmes. This will go a long way in avoiding duplication of the activities and help bring scale as well as different perspectives and learning for the success of Government programmes.
Capacity Building: In order to allow for greater transparency, more accurate data collection methods and monitoring mechanisms are necessary as capacity building tools at the State Government level. Developing dedicated technological infrastructure and utilising the human resources available more effectively for data collection and analysis is an essential part of the capacity building process at the State level.
Consistently updating data points as identified in the State Indicator Framework and District Indicator Framework would go a long way to showcase progress especially to those stakeholders who may be keen to partner and finance projects in order to achieve specific targets.
A key part of capacity building efforts will be to engage in specialised training programmes, it said.
The vision document maintained that the Government is already committed to the SDGs and is taking concrete steps with the support of the Sustainable Development Goal Coordination Centres DGCC.
Awareness sessions and specific training in collaboration with the State Government’s apex training institute, Administrative Training Institute (ATI) will be undertaken so as to share greater knowledge about how best to robustly monitor and report the SDGs so as to build the State Government’s capacity. The focus will be on the following:
Depending on the focus area of the respective Departments which are based on the challenges and needs identified, the relevant training programmes will be designed and executed for sensitising State Government officials aligned with local priorities, it said.
In order to help improve the State’s self-sufficiency, both financially and from a resource (human and capital) point of view, it said partnering with the relevant stakeholders in an innovative manner can yield positive results.
The Government stated that in an interconnected world, new forms of multi-stakeholder partnership that are enabled with technological development and the right capacity building efforts are needed in order to mobilize and unlock the transformative power of tapping locally relevant resources for Nagaland’s Vision 2030.
(Page News Service)