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Kohima: As India faces revenue fall due to the novel coronavirus or COVID-19 pandemic, Nagaland’s economy is projected for an annual cash shortfall of Rs 955.44 crore deficit for 2020-21 based on April receipts from the Central government. However, with a monthly fall of Rs 111 crore deficit due to the pandemic, the financial deficit is likely to increase by end of the financial year.

Additional chief secretary and finance commissioner Sentiyanger Imchen, while addressing a presser on Friday, said that as Nagaland is dependent on funds from the Centre, the state’s economy is projected for annual cash shortfall of 995.44 crore. In this regard, chief minister Neiphiu Rio had written to the Prime Minister on April 25 asking the Central government to provide a special dispensation over the financial crisis of the state.

Additional chief secretary and finance commissioner Sentiyanger Imchen (second from right) and other top officials of the finance department addressing the media on Friday

In the letter, Rio pointed how the state is facing crisis in managing the finances since last year when an amount of Rs 939 crore was received less in the state’s share of Union taxes and duties. “Being a post-devolution revenue deficit state we had no escape but to add to the accumulated deficit,” a section of the letter read.

In the current financial year, against the projection of the Rs 4900 crore by the 15th Finance Commission, the amount incorporated in the Union budget for the state was Rs 4493 crore. As the receipt in April of Rs 264 crore reflected a decline by about Rs 57 crore, Rio expressed concern in the huge fall of revenue fearing that payment of salaries and pensions may become a struggle as the monthly receipt is expected to drop further in May.

Citing the letter, Imchen said that the finance department has conducted a study on the impact on the state’s economy which is estimated to be “quite big”. While the state’s budget was projected for an annual cash deficit of 48.2 crore, the study revealed that on an average, the state’s monthly receipt is estimated at Rs 807.82 crore which is inclusive of the monthly revenue deficit grant of Rs 326.42 crore awarded by the 15th Finance Commission. He clarified that although the 15th Finance Commission is yet to give its final report, the award for the year 2020-21 is given.

As per the projection of Union government, he said that Rs 374.45 crore was marked as the state’s share of central taxes based, which was based on the presumption that the economic growth will be at 10%. Following the global pandemic, the Indian economy is projected to grow at 1.9%, he said.

Projections based on April receipts from the Central Government

Despite the projection, the state received Rs 263 Crore in April, which is a shortfall of Rs 111 Crore. The state’s “own revenue” was projected at Rs 106 Crore. With the pandemic, the state’s own revenue, in the letter to the PM, was projected at Rs 98.03 Crore. “But in reality, as of April 30, instead of Rs 98 Crore, it is Rs 21 Crore which is a difference of Rs 77 Crore,” Imchen added.

Meanwhile, in the letter addressed to the PM, Rio highlighted that the state has taken “tough austerity measures” such as freezing fresh appointments, freezing dearness allowance and relief, pro-rata cuts in revenue and developmental expenditure including steps to increase revenue mobilisation.

“However, given the huge deficits already building up, these measures may not be sufficient to avert a financial crisis,” Rio wrote. Besides asking the Central government to provide a special dispensation to help the state to “tide over the impending financial crisis” in the state.

The chief minister also requested the central government to “release the pending liabilities of Rs 529 Crore under the erstwhile Special Plan Assistance which the NITI Aayog has already cleared”.

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