CM HIGHLIGHTS SALIENT FEATURES OF THE STATES FINANCES Chief Minister Neiphiu Rio informed the house that since the year 1989 the Government of India had discontinued funding pattern which used to cover all Non-Plan gaps of the respective year, as was expected in terms of the provisions of the 16 Point Agreement. Consequently, the financial problems of the State started from the year 1990 onwards. As a result, from the year 1990 to 2002 onwards the State had to impose restrictions such as -Pro-rata cuts in both Plan and Non-Plan expenditure from time to time. All salary payments, including Work Charged salary could not be released in time and there was a time when even pensions, Leave Encashment, Medical Reimbursement, Debt servicing and power purchase dues could not be cleared in time etc. He added, Nagaland is one of the best states in the country in the area of repayment of debt to all the Financial Institutions in time. The positive management of the States finances was even acknowledged by the Governor of the RBI during his visit to the State in the year 2007. The 13 Finance Commission fixed the ceiling on the states salary expenditure at 35% of the total revenue expenditure excluding pension and interest payments, despite knowing that during the time of their visit our expenditure on salary was already around 60%. In order to comply with the recommendations of the 13 Finance Commission, the State Government would have to retrench 46,599 employees, which is of very serious implications. However, we have not resorted to any drastic measure keeping in mind the welfare of the employees. We have presently an excess of 54,689 employees and it is necessary for all of us to remember that the problem of excess State Government employees is not a recent phenomenon but has been occurring since the existence of statehood. One major reason for the negative state of our finances was the arbitrary imposition of cash drawdown by the Planning Commission on the State. This method took into account the artificial cash balances shown against the balance of the State on the last day of March as an available resource of the State for the State Plan, without recognizing the fact that it was unreconciled by RBI. In fact, by the last day of March the States cash balance is always in negative. The positive balance shown was mainly on account of inability of RBI to reconcile accounts due to heavy financial year ending transactions of all States. As a result, we were penalized for resources that did not exist. He inform that unlike most other States, we have adopted preventive measures to tackle this problem by closing the financial year effectively a few days ahead, so that the actual cash position is established on or before 31st March so that we are not victimized by an unfair practice called Cash Drawdown which has been put in place since 2012-13. We appreciate the Government of India, which is providing more than 90% of our resources as compared to our own resources which come to less than 10%, and further added that for the last 53 year, ie, from the 3rd Plan period of 1961-1966 to the 12th Plan period from 2012-17, or from the year 1961-62 when the Interim Government was in place to 2013-14, the total money received by the State for developmental purposes in 53 years is Rs. 15,999 crores. The amount provided to our State since statehood for developmental purposes is less than a years Plan outlay of a medium sized State in our country. He added that, during the 50th year of statehood the Plan outlay for the current year 2013-14 as compared with the Plan size of the previous year has in fact been reduced by 13.04%. But if we are to exclude NEC & NLCPR which have been included arbitrarily in the State Plan for 2013-14, the actual reduction comes to about 26%. Even last year, out of the total Plan outlay of Rs. 2300 crores, the actual amount released by the Government of India was Rs. 1726.85 crores, resulting in a shortfall of Rs. 573.15 crores. As initiated by the DAN Government at the level of Prime minister and Finance Minister, a decision was taken by the Government of India to open a special window of funding to reduce the negative impact of the 13th Finance Commission recommendations to basically cover the BCR Gap, especially for the Special Category States. However, the Government of India was unable to provide the SCA untied as per the BCR. The Government of India was unable to release the pending reimbursements of the State and as of today, the pending amount stands at Rs. 324.18 crores. While the estimate of the closing deficit of 950.90 crores for the year 2013-14, and more over the actual deficit could have been much less. He maintains that the deficit has been on the higher side due to reasons like less receipt of State Share of Central Taxes- Rs. 90.52 crores. With these two receipts, the actual deficit would have been only Rs. 536.20 crores (Rupees five hundred thirty six crore twenty lakh only). He maintains that in spite of many difficulties the State Finances were managed well during the past 11 years and the Government has never failed to pay salary and pension on time.
Posted on: Mon, 24 Mar 2014 12:45:53 +0000
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