The COVID-19 cess on high speed diesel and motor spirit (petrol) came to effect on the midnight of April 28 Credit: Representational image

Kohima: Following a cabinet meeting held in Dimapur on Wednesday, the Nagaland government has announced its decision to revoke the COVID-19 cess on petroleum products. A total of Rs 10.32 crore has so far been collected from the cess which came to force on the midnight of April 28.

In an attempt to raise resources to combat the deadly virus, the state had levied the cess on High Speed Diesel and Motor Spirit (Petrol) at the rate of Rs 5 per litre for diesel and Rs 6 per litre for petrol and other motor spirits.

The decision of the state government comes after several civil societies and political parties demanded a rollback on the COVID-19 cess. The DNSU on September 19 submitted a 4-day ultimatum to the state government to revoke the cess, threatening of closing down petroleum outlets within its jurisdiction.

Spokesperson for COVID-19 Neiba Kronu informed that the State Cabinet discussed the matter and felt the importance to brief the general public of the financial issues confronting the State, and the likely impact it will have on the activities of the Government.

Also Read: Nagaland: DNSU threatens to ‘close down’ petroleum outlets over COVID-19 cess

Kronu said that as a result of the lockdown imposed following the outbreak of the pandemic, the country’s economy during the period April-June 2020 shrunk by 23.9% over the same period of 2019, which negatively impacted the receipts of the Central Government.

“Since we are a revenue deficit state dependent on resource transfers from the Central Government, our receipts have also reduced, especially our Share in the Taxes and Duties of the Central Government,” Kronu said.

The State Government initially estimated monthly receipts of Rs 320.96 crore per installment as Share of Central Taxes and Duties as per the figure reflected in the Union Budget of 2020-21. However, the actual receipts were only Rs 263.80 crore which resulted in a monthly deficit of Rs 57.16 crores.

He said that the amount then reduced to Rs 240.47 crores since June and the monthly deficit has now risen to Rs 80.49 crores. The total deficit during 2020-21 on account of shortfall in receipts of Share of Central Taxes and Duties alone comes to Rs 1080.13 crores. The negative impact is not confined to Central Receipts as the state’s own revenues fell by about Rs 38 crore a month over the receipts of 2019 during the period April-August 2020.

“Given the present trends, the revenue receipts of the state are likely to witness a decline of Rs 1650 crores during 2020-21 against what has been budgeted,” he added. In 2013-14, the deficit stood at Rs 950.09 crore and in 2018, it increased to Rs 1607.73 crore. The current year 2020-21 is expected to close with a deficit of Rs 2358.81 crore as per budget estimates and this includes an increase of Rs 939 crore since 2014-15.

He said that this is due to various factors such as implementation of the last pay revision for the state government employees and payment of pending dues and liabilities to contractors following various court judgments in their favor, leaving the government with no alternative but to pay. However, in view of the unforeseen developments caused by the pandemic, the year is expected to close with a much higher deficit than estimated, said Kronu.

Also Read: Nagaland: Minister, 66 others test COVID-19 positive; tally 5,671

The annual revenue shortfall is estimated at Rs 1646.65 Crore deficit

As per the latest estimates, the annual revenue shortfall is estimated at Rs 1646.65 Crore deficit. The latest estimated monthly revenue shortfall is Rs 137.22 crore deficit.

Kronu said that due to the negative impact of the pandemic, the state government has been compelled to adopt drastic measures to mitigate the negative effects of the fall in receipts to avoid a potential collapse which included measures such as pro rata cuts in the budgets of the departments, imposition of various austerity measures and mobilization of additional resources through imposition of COVID-19 cess.

On fighting COVID-19

Kronu said that a total amount Rs 27.84 crore has been received from the Central government to fight COVID-19. A total amount of Rs 115.80 crore has been spent from the state’s own resources for on COVID-19 pandemic.

Meanwhile, a total Rs 10.32 crore has been collected from the COVID-19 cess from April to July 2020. He informed that the August collections are yet to be deposited.

The State Government also clarified that the releases made by the Finance Ministry are Revenue Deficit Grant and State’s Share of Central Taxes and Duties which are meant to meet various types of recurring carefully such as salaries, pensions, debt servicing and so on and that there is no mention in any of the sanction letters of the Central Government that they are meant to be spent on COVID-19.

As these releases are receivable even in the absence of the pandemic, the state government said that the contention of getting extra funds does not arise.

The government said that the people of Nagaland are exempted from all taxes, and do not pay tax and only know how to receive. But what it receives from the center also does not cover the entire meticulous of the Government and cannot sustain on the “belief that all facilities should be made available to the public without any responsibility on the part of the citizens”.

“We have come a long way since statehood, and like the rest of the entire world, we need to learn to pay taxes and acquire a sense of responsibility and accountability towards building of our nation and our economy,” added Kronu.

Also Read: Nagaland Congress slams govt over COVID-19 cess, rising unemployment

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