Nagaland chief minister Neiphiu Rio addressing the media on Monday Credit: EastMojo Image

Kohima: Following the revenue receipt for the month of May, Nagaland has projected an annual shortfall in revenue for the financial year 2020-21 to about Rs 1,652.64 crore. This was announced by Nagaland chief minister Neiphiu Rio during a press conference on Monday evening.

“Because of the decline in all economic parameters and the resulting negative impact on our taxes and resources, we are looking at a grim situation where the annual shortfall in revenue may come to about Rs 1,652.64 crore,” Rio said.

The chief minister also said that most activities of the state government during 2020-21 will be centered on the COVID-19 pandemic and related activities. With un-budgeted amounts being utilized to fight the pandemic in the coming months until the situation stabilises, he said that it may further lead to decline in the financial position of the state.

In the current financial year, against the projection by the 15th Finance Commission, the amount incorporated in the Union budget for the state was Rs 4,493.37 crore for share of central taxes and duties for Nagaland—given on the formula worked out by the Commission which includes parameters such as geographical area, forest cover, population and income distance.

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Rio said that the actual receipt is much less at Rs 263.80 crore which is being received in 14 equal installments. “Since the state’s 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 the year at current levels of receipt,” he said. Rio also said that there is possibility of receipts under this head to be further reduced as it is based on actual tax collections of the Central 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 added.

For the year 2020-21, the 15th Finance Commission has recommended Revenue Deficit Grant of Rs. 326.42 crore each month to the State and the fixed amount does not change. The chief minister clarified that in the case of Revenue Defficit Grant, receipts under this head is used to meet revenue expenditure on salaries, pensions and debt servicing, and so on. “Since it is meant to meet the shortfall in expenditure relating to salaries, pensions, debt servicing etc., there is no scope to divert this grant for other purposes as is being misunderstood by many. In fact, this grant does not fully cover shortfall in revenue expenditure and so, a deficit in resources still remains even after this grant,” he added.

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Rio reiterated that the main receipts of the state are the Revenue Deficit Grant and the Share of Central Taxes and Duties. He said: “We receive the Revenue Deficit Grant because as the name itself says, we are in revenue deficit even after the awards. So in order to reduce the gap of deficit in resources to meet revenue expenditure, the Revenue Deficit Grant is given.”

Despite the annual shortfall projected at Rs 1,652.64, Rio reiterated the austerity measures taken by the state government to steps to mitigate the crisis through the austerity measures. Should the situation further worsen, the state government is prepared to enforce further austerity measures, he said.

Rio also revealed that the government has so far managed to pay salaries to its employees and release most of the funds received from the Central government for Centrally Sponsored Schemes (CSS) programmes. He further appealed all residents to join hands to successfully fight and also learn how to handle calamities of a large scale and discover strengths and opportunities on how to build the state’s economy.

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