ashley do rosario
Much has been spoken, debated and written about the Goa government’s rising debt. As of today, the total outstanding debt stands at Rs 15,551 crores, according to Chief Minister Pramod Sawant who in the same breath also assured the Goa legislative assembly that the situation is not alarming and within the State’s means and capacity to handle.
But is it? Can Sawant, his cabinet and the battery of bureaucrats manning his finance ministry afford to be cavalier about how they deal with the State’s purse-strings and continue to rely on borrowings to meet the cost of running the Goa’s financial affairs?
The answer is an obvious no, because a significant chunk (almost 40 per-cent) of the money in the State’s coffers goes into meeting the statutory interest and loan repayment of past years. Of the balance 60 per-cent of the funds at the government’s disposal goes into meeting expenditures towards salaries and pensions, besides other inevitable and essential revenue expenditure to keep institutions and infrastructure in education, health, irrigation and ongoing social welfare schemes running, thus leaving very little to be invested or spent on infrastructure and other innovations that many governments do to spur economic activity and help their populations improve quality of life. Take for instance the emergency situation Goa has faced over the last month or so owing to the floods caused by the monsoon’s fury. Very preliminary estimates of the damage and losses have been pegged at Rs 10 to 15 crore.
Much of this Rs 10-15 crore figure, is contributed by the damage to agriculture and if compensation to the affected farmers is not timely, a whole community dependent on farming could fall victim to the cascading effect of debt.
Yet, the Goa government cannot set aside the Rs 10-15 crores to shoulder this responsibility primarily because it simply isn’t cash rich to meet the contingency, despite borrowing a whopping Rs 2000-odd crores year after year.
This year between April-June for instance, the State has already borrowed Rs 400-crores in market loans or by auctioning State stock (securities) through the RBI alone but to pay up for the farmers’ losses and other collateral damage inflicted by the ferocity of the monsoon, the Chief Minister says he will seek funds from the Centre.
The rising debt and servicing it no doubt has maimed the State’s financial health over the last six to seven years. Goa’s loan repayment commitments which stood at Rs 3,390 crores in 2012-13 touched a whopping Rs 9,111-odd crores in the 2018-19 fiscal.
According to PRS Legislative Research, Goa is among 20 other Indian States, which will cross the 20 per-cent of GSDP fixed for outstanding debt. At the end of the 2018-19 financial year, Goa’s debt (unreconciled figures) stood at 15,222-odd crores, which crosses the quarter mark of of the State’s estimated Gross Domestic Product of approximately Rs 61,000
crores.
Under the new tax revenue sharing regime which the current 15th Finance Commission is to finalise for 2020 onwards in the post GST scenario, States including Goa are expected to have far less control on mopping up revenues. Needless to say that it will have to tighten its purse strings and fast, lest it soon falls into the proverbial ‘debt trap’, where governments in the future will have no other option but to borrow more to offset past loans and interest re-payments putting at risk the State’s progress - economic
and social.
