CAG flags Rs 26.43 crore undischarged liabilities, pending utilisation certificates since 2011-12
Our Correspondent
Kohima | September 4
Nagaland’s economy showed moderate growth during the Financial Year 2024-25, with GSDP registering growth of 9.39% as against the previous financial year. The State contributed (0.14%) to GDP of India.
This was stated in Report of the Comptroller and Auditor General of India on State Finances for the year 2024-25 of the Government of Nagaland Report No 2 2026 (State Finances Audit Report), tabled by Chief Minister Dr Neiphiu Rio at the 9th session of 14th Nagaland Legislative Assembly in Kohima on September 3.
The Report on the finances of the State of Nagaland provides an independent assessment of the fiscal position of Nagaland for FY 2024-25. It analyses the State’s overall financial health and reviews its revenue and expenditure trends, assesses the State’s debt position and borrowing patterns, evaluate its compliance with fiscal responsibility laws and compares its performance against fiscal health indicators.
The Report observed that the revenue receipts of the State contracted (0.42%), driven by decreased grants from the Centre despite higher tax collections, notably GST, and increased central tax devolution.
However, non-tax revenue grew (0.20%) over the previous year. The State’s own revenue performance improved yet dependence on central Grants-in-Aid remained substantial.
Expenditure of the State was dominated by higher growth of revenue spending (3.47%) particularly committed costs and subsidies (75.01% of RE, 60.99% of TE and 71.50% of RR), leaving limited fiscal space for capital investment.
Capital expenditure remained volatile and below budgeted levels, reflecting constraints in infrastructure investment.
The report stated that the state was not able to maintain the fiscal deficit within the target levels of the State FRBM Act from 2022-23 onwards, thereby rendering little room for fiscal consolidation.
Moreover, the outstanding liabilities remained within the numerical targets only in 2020-21, needs to be seen in the context of contingent liabilities through guarantees. Besides, the State Government also carried forward significant undischarged liabilities in respect of State Road Safety Fund, interest liabilities, State and Central Finance Commissions grants etc., to the tune of Rs 26.43 crore (0.14% of Total Expenditure) in the FY 2024-25.
Audit through its various reports have already highlighted the increased efforts to be taken by the State in realising the arrears in tax revenue, reducing the compliance risks in the taxations, recycling the capital investments made in the SPSEs and rationalizing the expenditure in tune with revenue growth.
The report stated that the fiscal year also continued to witness large scale savings and excess in revenue/capital, charged and voted sections of 79 grants (Revenue: 78 grants and Capital: 36 grants). The excess expenditure in FY 2024-25 requires regularisation by the legislature. Concerns also arise from delays in submission of utilisation certificates, some of which are from 2011-12, pending accounts for autonomous bodies, and substantial use of Minor Head 800-Other Receipts/Expenditure affecting transparency in financial reporting.
The report notes positive steps like implementation of Single Nodal Agency (SNA) and SNA-SPARSH for better fund tracking in centrally sponsored schemes.
“The increasing debt load, high committed expenditure, and limited capital investment raise concerns about fiscal sustainability. There is a need for revenue augmentation, better expenditure control, and structural reforms to ensure long term fiscal health,” the report stated in executive summary chapter.
Highlights
• The ratio of Revenue receipts to GSDP was low, with a contraction in the latest year, indicating fiscal stress. The State continues to rely heavily on Central transfers, particularly Grants-in-Aid, exposing its fiscal position to external policy decisions and reducing autonomy.
• Own Tax Revenue of the State increased from Rs 1,598 crore in 2023-24 to Rs 1,710 crore in 2024-25 due to increase/expansion in the tax base, and improvement in compliance level by the department under SGST.
• Taxes on Vehicles also increased due to levy and collection of one-time cess i.e., Nagaland Road Safety Fund on every motor vehicle used or kept for use in the State despite decrease in registration number of vehicles
• During 2024-25, the State Government could maintain the minimum daily cash balance with the RBI for 308 days and as such WMAs/SWMAs/ODs was availed for 57 days during the year, for which an interest of Rs 1.91 crore was paid.
• As per Finance Accounts of the State for the FY 2024-25, the Revenue surplus of the State was Rs 752.72 crore (1.67% of GSDP), Fiscal deficit was Rs 2,772.73 crore (6.14% of GSDP) whereas Primary deficit was Rs 1,605.03 crore (3.56% of GSDP). However, Audit found that, during 2024-25, the State Government misclassified Rs 14.05 crore of Revenue nature as capital expenditure (Details discussed in Paragraph 2.5.6 of Chapter II). This resulted in understatement of Revenue surplus and overstatement of fiscal deficit and Primary deficit to that extent.
• The Revenue surplus, Fiscal deficit and Primary deficit worked out to be Rs 738.67 crore (1.64% of the GSDP), Rs 2,786.78 crore (6.17% of the GSDP) and Rs 1,619.08 crore (3.59% of the GSDP) after Audit.
• Out of the total expenditure of Rs 18,858.47 crore incurred by the State during the financial year 2024-25, a portion of Rs 2,790.41 crore (14.00%) pertained to pass through transactions such as Finance Commission grants (Rs 90.54 crore), labour cess collected and kept in Government Account and transferred to the Building and Other Construction Workers’ Welfare Board (Rs 12.78 crore), transfer of Central share received by the State on Centrally Sponsored Schemes (Rs 2,184.47 crore), transfer of NPS contributions from the designated major head in Public Account to designated fund manager (Rs 502.62 crore), etc.
• During the current year, financial assistance to the local bodies and other institutions decreased by Rs 108.76 crore (17.27%) over the previous year. The decrease was mainly due to decrease in assistance to Other Institutions (Rs 164.35 crore: 30.85%). However, during 2024-25, there was increase in assistance to Municipal Corporations and Municipalities and Panchayati Raj Institutions over previous year, mainly on account of payment of grants recommended by the Fifteenth Finance Commission (15th FC).
• As of 31 March 2025, the State Government’s investment in companies, corporations and other bodies stood at Rs 339.87 crore, comprising Government Companies (Rs 206.69 crore), Co-operative Bank Societies (Rs 107.45 crore), and Statutory Corporations (Rs 0.04 crore), Other Joint Stock Companies and Partnerships (Rs 25.69 crore).
• In 2024-25, the State’s committed expenditure of Rs 11,454.79 crore comprising salaries & wages (Rs 7,087.51 crore), pensions (Rs 3,199.58 crore), and interest payments (Rs 1,167.70 crore), accounted for approximately 71.21% of the Revenue Receipts. In addition, subsidies amounted to Rs 47.12 crore, bringing the total rigid expenditure to Rs 11,501.91 crore, which was nearly 71.50% of the State’s Revenue Receipts.
• Out of the estimated cost of Rs 2,609.91 crore on these 309 ongoing projects, Rs 305.18 crore was spent till 2024-25. Therefore, due to non-completion of these 309 projects, Capital Expenditure of Rs 305.18 crore remained blocked. Due to incomplete information in Appendix-IX of the Finance Accounts for the year 2024-25, Audit could not ascertain the actual progressive expenditure, physical progress of work position of pending payment (future liability) and revised cost, if any, as on 31 March 2025.
• As of 31 March 2025, the State Government’s investment in companies, corporations and other bodies stood at Rs 339.87 crore, comprising Government Companies (Rs 206.69 crore), Co-operative Bank Societies (Rs 107.45 crore), and Statutory Corporations (Rs 0.04 crore), Other Joint Stock Companies and Partnerships (Rs 25.69 crore).
