By Asangba Tzudir
A stark warning issued by the Chief Minister of Nagaland Dr. Neiphiu Rio, that Nagaland could face a situation of “no salaries” and even an “overground revolt” if funds are drastically reduced under the 16th Finance Commission should not be dismissed as a mere political rhetoric. This is like raising a Red Card in the midst of a football match, reflecting a situation of deep fiscal vulnerability. Plagued by a dependency syndrome, heavily dependent on central transfers, such a situation could trigger not only administrative paralysis but serious social unrest.
Nagaland’s economy has for a long time relied on central support to bridge deficits. Unlike industrially vibrant states, Nagaland’s revenue base is very limited. The scenario is such that Government salaries form the foundation of economic circulation, thereby sustaining many families, local markets, and service sectors. A delay or stoppage in salaries will lead to serious consequences and which would ripple across society.
The Chief Minister’s concern that the state could lose between Rs. 8,000 to Rs. 9,000 crore annually if corrective measures are not taken heightens the scale of the threat. Going into the micro context of the fiscal deficit, it cannot be taken as an abstract accounting term. When governance stops paying its employees, the effect is direct where the morale collapses, service delivery deteriorates, and public confidence erodes.
While the deficit situation is understandable, it also invites serious introspection. While fiscal dependency is not a new problem, the present crisis underscores the urgent need for structural reforms within the state. There is need for greater financial discipline which includes plugging revenue leakages, and promoting local enterprise and which should become long-term priorities. On the brighter side, the situation also presents an opportunity to rethink economic self-reliance.
While discussions with Union Finance Minister Nirmala Sitharaman show that the matter has reached the highest level, the Government of India must also recognise that abrupt fiscal compression in a politically and economically sensitive state has its own risks. Stability in Nagaland needs to be collaborative between the state and the centre.
The warning of an “overground revolt” is particularly telling where overground unrest would emerge from civil society organisations, government employees, and the general public. Beyond the ideology, it would reflect frustration with issues of livelihood insecurity. Such distress can quickly change into agitations and hunger strikes, and which has become a ‘working’ trend.
However, the situation should not let the state replace prudence with panic. What is needed is a transparent dialogue between the Centre and the State based on facts substantiated by data on the ‘special needs’ situation. If the 16th Finance Commission formula inadequately captures the realities of smaller, geographically challenging states, corrective mechanisms must be explored within the constitutional frameworks. With constructive engagement, financial catastrophe can be averted. But delay, denial, or complacency would be very costly in the face of reform.
There is also need for fiscal reform, and which calls for some painful measures, painful because a ‘normalised condition’ cannot be reversed overnight and which include rationalization of expenditures, prioritisation of essential services, and innovative revenue generation.
The situation calls for responsibility on all sides. There has to be fiscal realism from the State, while it also demands empathetic consideration from the Centre, and it also requires the people to understand the process. Only then Nagaland can navigate this situation without compromising stability.
(Dr. Asangba Tzudir contributes a weekly guest editorial for The Morung Express. Comments can be emailed to asangtz@gmail.com).
