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Financial report card

29 Mar. 2017 11:46 PM IST

Nagaland chief minister Dr. Shürhozelie Liezietsü couldn’t have wished for a worst time to present his maiden budget as the finance minister because the current financial year 2017-18 is the last for the present DAN-III coalition government before facing election in 2018 and he has to contend with another huge deficit projected at Rs.1437.84 crore at the end of the financial year 2017-18. That means, the recently installed chief minister will only have to manage the finances and ensure it does not rise further. As things stand today, special category states like Nagaland and other north eastern states are not going to experience any benefit under the NITI Aayog as they did when the Planning Commission was in existence. The common refrain from finance ministers of the special category states was that the recommendation of the 14th Finance Commission would increase devolution of Central taxes to the states from the existing 32% to 42%; yet their requirements would still fall short of demand by 50%. In the affairs of any state, the first that needs to be dealt with is finance; without which, all dreams and visions are meaningless. Financial health as it is, can be made healthy only through proper care and handling. Politicians have a problem with financial discipline, because they are on a five-year tenure and need to please their voters who care more about financial benefits then the need for fiscal responsibility. Thus, though Nagaland has received the highest allocation under the recommendations of the 14th Finance Commission; yet there has been no fiscal discipline and as a result of which the deficit continued to hover at around Rs.1400 crore. The deficit cannot be reduced to a large extent as desired since there is hardly any revenue income from the state and therefore, it will need a huge interest free loan or a grant from the Centre to wipe out the deficit. That is farfetched since the parameters of central funds to the state are clearly dependent on where the chief minister decides to allot as per the guidelines of NITI Aayog. The return on investment is not a likely possibility. Dr. Shürhozelie had told media persons after presenting the budget on Tuesday that his government plans to spend 39% of the budget for social sector such as - education, health, water supply and 19% for rural development and 13% for agri and allied sector. After all, at the end of it all, some practical steps are needed in order to escape dire financial strait. Each financial year, deficits show in the budget and eventually grow if uncontrolled as may be evident from the current situation. The demand for implementation of the 7th RoP for government employees will also open another huge hole in the state finances. Currently, the options are too few even if the state government thinks it could tackle the problem by increasing revenue collections since this would hardly be able to make any dent on the deficit figure. How long can the politicians simply expect the Centre to give them money to spend without responsibility when infrastructures are in deplorable condition? A good financial health is achievable only if the government is serious about good governance and which continues to be the criteria of Prime Minister Narendra Modi.

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