The financial health of Manipur has come under renewed scrutiny, with the latest audit by the Comptroller and Auditor General (CAG) flagging mounting fiscal stress, weak revenue mobilisation, and persistent lapses in financial discipline during 2023–24, even as the state managed to retain a revenue surplus.
The State Finances Audit Report (2023–24) paints a mixed picture—one where headline indicators suggest relative stability, but underlying trends reveal structural fragility and growing dependence on borrowings to sustain expenditure.
Manipur’s economy expanded at a steady pace, with Gross State Domestic Product (GSDP) rising by 11.8 per cent to ₹44,995 crore in 2023–24. Over a five-year period, the state recorded a compounded annual growth rate of 10.84 per cent.
However, this growth did not translate into stronger fiscal fundamentals. Revenue receipts declined by 7.47 per cent during the year, falling to ₹14,706 crore, largely due to a sharp drop in grants from the Centre and a steep contraction in the state’s own tax revenue.
The state’s own tax revenue fell by over 34 per cent, highlighting what the audit described as a “significant underperformance” in domestic resource mobilisation.
Despite the revenue shortfall, Manipur maintained a revenue surplus of ₹884 crore in 2023–24. Yet, this marked a steep 49 per cent decline from the previous year, signalling a weakening fiscal cushion.
The audit noted that the narrowing surplus was driven by falling receipts rather than improved expenditure efficiency, raising concerns over sustainability.
At the same time, the fiscal deficit widened to ₹1,863 crore, or 4.14 per cent of GSDP—well above the 3 per cent ceiling prescribed under fiscal responsibility norms.
Borrowings fund consumption, not assets
One of the more troubling findings relates to the use of borrowed funds. Of the total borrowings during the year, only about 28 per cent was directed towards capital expenditure, indicating that a substantial portion was used to finance routine expenses and debt servicing.
Capital expenditure itself declined by over 21 per cent to ₹2,748 crore, limiting the state’s ability to build long-term productive assets.
The audit warned that such patterns could undermine future growth, as debt-financed spending is not translating into commensurate asset creation.
Rising rigidity in spending
A major constraint on fiscal flexibility continues to be the high level of committed expenditure—primarily salaries, pensions and interest payments.
These accounted for between 57 and 65 per cent of revenue expenditure over the past five years, rising to over ₹9,000 crore in 2023–24.
When combined with other inflexible spending, nearly 72 per cent of the state’s revenue expenditure was effectively pre-committed, leaving limited room for developmental priorities.
Off-budget borrowings add to risks
The CAG also flagged the growing use of off-budget borrowings, with state-linked entities raising ₹153 crore during the year without reflecting these liabilities in the budget.
Although repayments are being serviced from the state budget, such borrowings bypass legislative scrutiny and understate the true level of public debt.
Outstanding guarantees stood at ₹1,482 crore at the end of March 2024, adding to contingent liabilities.
Budget credibility questioned
The report points to significant gaps between budget estimates and actual outcomes.
Revenue receipts were just 53 per cent of budget projections, while capital expenditure utilisation stood at a mere 27 per cent of estimates.
In several cases, supplementary allocations proved unnecessary, as departments failed to utilise even the originally budgeted funds, suggesting weaknesses in planning and expenditure management.
Persistent accounting and compliance lapses
Beyond fiscal aggregates, the audit highlighted systemic issues in financial reporting and accountability. Over 6,500 utilisation certificates worth ₹15,086 crore remained pending, raising risks of fund misuse. Nearly 1,917 contingency bills amounting to ₹7,379 crore were yet to be regularised. Funds worth ₹155 crore were found parked in bank accounts outside government books, in violation of financial rules.
Such lapses, the audit noted, weaken transparency and compromise the integrity of public financial management.
Debt levels stabilise, but pressures persist
Total outstanding liabilities stood at 41.94 per cent of GSDP in 2023–24—slightly lower than the previous year but still above recommended thresholds.
While debt sustainability indicators showed some stability, the persistence of primary deficits indicates that the state continues to rely on borrowing even to meet interest obligations.
Call for course correction
The audit underscores the need for a multi-pronged fiscal strategy—strengthening tax administration, improving expenditure efficiency, and ensuring that borrowings are channelled towards productive investments.
Without such corrective measures, the report cautions, Manipur risks entrenching a cycle of low revenue growth, high committed spending and rising fiscal vulnerability, even as headline indicators offer a veneer of stability.
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