Nagaland’s finances in 2022-23: A mixed outlook on growth and debt

Nagaland’s financial health for the year 2022-23 presents a mixed picture, as detailed in the latest Report of the Comptroller and Auditor General (CAG) of India. While the state has witnessed significant growth in its Gross State Domestic Product (GSDP), concerns around rising public debt, fiscal deficits, and unadjusted financial matters highlight ongoing fiscal challenges that need attention.

The CAG Report, based on the audited accounts of the Government of Nagaland for 2022-23, was presented before the State Legislature on 8th March 2025. The full report is available on the CAG’s official website (www.cag.gov.in), and copies can be obtained from the Office of the Principal Accountant General (Audit), Nagaland.

Key highlights from the report as shared by the Senior Deputy Accountant General of Nagaland

1. Economic Growth:
· Nagaland’s GSDP at current prices grew from Rs 26,527.42 crore in 2018-19 to Rs 35,933.96 crore in 2022-23, marking an overall increase of 35.7%.
· In 2022-23 alone, the state’s GSDP increased by 12.6% from Rs 31,912.54 crore in 2021-22, signaling robust economic growth.

2. State Budget and Revenue:
· The state’s budget outlay increased at a Compound Annual Growth Rate (CAGR) of 6.26%, reaching Rs 26,092.48 crore in 2022-23 from Rs 20,469.97 crore in 2018-19.
· Revenue receipts grew by 4.82% (Rs 648.12 crore) compared to the previous year, with increases in own tax revenue and non-tax revenue, while grants-in-aid from the Government of India saw a slight decrease.

3. Fiscal Deficit and Revenue Surplus:
· Despite the positive growth, the state faced a fiscal deficit of Rs 1,562.63 crore (4.35% of GSDP) and a decrease in the revenue surplus from Rs 1,634.06 crore in 2021-22 to Rs 688.90 crore in 2022-23.
· The fiscal deficit saw a significant rise compared to the previous year, indicating potential concerns about the state’s expenditure and debt management.

4. Expenditure Breakdown:
· Revenue expenditure accounted for 83.22% of total expenditure in 2022-23, while capital expenditure rose by 42.79% to Rs 2,704.22 crore.
· The state has faced challenges in reducing its committed expenditure, which includes salaries, pensions, and interest payments. These expenses amounted to Rs 9,921.54 crore in 2022-23, comprising 70.37% of revenue receipts.

5. Public Debt and Borrowings:
· The outstanding public debt liability grew by Rs 5,126.29 crore over five years, reaching Rs 13,241.81 crore in 2022-23, with a debt-to-GSDP ratio rising from 39.75% to 43.38%.
· Borrowings were primarily used for repaying earlier loans, raising questions about long-term fiscal sustainability.

6. Unsettled Financial Matters:
· There were unadjusted Abstract Contingent (AC) bills totaling Rs 554.76 crore as of March 2023, including 89 bills amounting to Rs 159.70 crore from 2022-23.
· Additionally, 145 utilization certificates for Rs 252.11 crore were pending submission, which could delay the approval of future funds.

7. State Public Sector Enterprises (SPSEs):
· The report reveals that seven SPSEs in Nagaland, including two non-working entities, are facing financial struggles. The accumulated losses of two working SPSEs have completely eroded their paid-up capital, raising concerns about their viability.

· Furthermore, Kohima Smart City Development Limited has failed to submit its annual accounts since its inception in 2017.

Implications and concerns:
While the state’s economy has grown over the past five years, the rising public debt, fiscal deficit, and unadjusted financial matters present significant challenges for the future. The increase in committed expenditure—especially in salaries, pensions, and interest payments—limits the flexibility of the state’s financial planning. Additionally, the growing reliance on borrowings to repay past debts could further strain the state’s financial stability.

The CAG’s findings highlight the need for greater financial discipline and transparency to ensure that Nagaland’s economic growth is sustainable and beneficial for all its citizens.

MT