Goa’s financial situation requires a closer scrutiny. It is not just the opposition political parties that are highlighting the sorry position of the State’s finances, industry bodies too are doing so, and one can safely assume that they don’t have a vested interest when pointing out to the rather precarious situation. Yet, much over a week after ASSOCHAM, a major industry body released a report confirming the falling growth rate in investment inflow in the State, the government is yet to respond to this.
Neither has the Goa government verified the conclusions of the ASSOCHAM study, nor has it denied its veracity. On the other hand the opposition Congress was quick to point out that it had earlier exposed the government’s failure in fiscal management based on the Reserve Bank of India report on the State’s financial position and debt trap. Congress has said in the past and reiterated that due to the mismanagement of finances, each person in Goa is born with a debt of approximately Rs 90,000 on his head. The government response to this is that most of the loans were taken during the Congress period, but what about the ASSOCHAM findings?
ASSOCHAM, which is the leading and largest chamber of commerce in the country, in its report ‘Goa: Economic & Investment Scenario’, had said that the State has ‘virtually failed to attract investment as year-on-year growth rate for inflow of new investments dipped to about nine percent in 2015-16 from a level of over 91 per cent in 2014-15’. The chamber that reasoned the drop to be due to the fluid economic situation prevailing in the State, chastened Goa for ‘seriously lacking’ two important conditions for continuous flow of investments which are predictability and stability. Both these perhaps arise from the heightened social-political movements in the State that has led to people keep track of every move by the government in introducing development projects, scrutinising the project reports for inconsistencies.
While NGOs in Goa have been voicing out loud their opposition to proposed projects, they have always shored up their opposition with arguments that have been mainly indisputable and have often been upheld by the court of law. Stability and predictability in an investment scenario would come when the government began to clear projects that are not environmentally risky. That has been the first point that Goans and NGOs in the State have been scrutinising when any new project is proposed in their village or surroundings. As the ASSOCHAM report itself points out, the positive growth rate is from the services and construction and real estate sectors, and not from industry. In such a scenario, where new projects in Goa involve construction, there will be public opposition and investments that will have to be rejected leading to a fall in investments.
While, a dip in the growth rate of investment inflow from 91 per cent to 9 per cent in just one year is alarming, that is not the only failure that ASSOCHAM found with the economic situation in Goa. Its study concluded that there has been a significant downfall in the growth rates of two of the three major sectors that has slowed down the State’s economic growth. ‘The industry sector growth rate has recorded significant deceleration; similarly service sector has also witnessed significant moderation in its growth rate. Therefore, it is necessary that the State concentrates on the corrective measure to revive the sectors,’ the report states. The report finds that the growth rate of services is a ‘worrying factor’ as in terms of annual figures this has fallen from 11 per cent in 2009-10 to 8.6 per cent in 2013-14. The industrial growth rate too fell from 10.5 per cent in 2009-10 to 5.4 per cent in 2013-14.
ASSOCHAM paints a bleak picture of the State’s economy. But it is not the first chamber of commerce to do so this year. In March this year, in its pre-budget presentation, the Goa Chamber of Commerce and Industry (GCCI) had clearly stated that major companies in the State are contemplating closing down their manufacturing units in the State and establishing them elsewhere. The Chamber had listed the names of major companies that had moved out of Goa in the past couple of years due to the ‘unhealthy environment for industrial growth’ in the State, and even further substantiated this by pointing out that the World Bank ranked Goa at 19 among Indian States in its Ease of Doing Business Survey 2015.
Contrast this to the State Budget 2016 when the Chief Minister had presented a surplus budget of Rs 158.82 crore. He had done it last year too and projected a surplus budget but this had then been pushed to Rs 1000 cr deficit for the year ending March 31, 2016, an indication that Goa’s economy is not as stable as it is projected to be.
The ASSOCHAM report warns that the poor performance of the economy could have implications on investor sentiments. It has, however, not just pointed out to the failures, but has also made some suggestions, among them adopting a better strategy for growth and fiscal management, calling upon the State to identify factors that would stimulate private investments as it is one of the principal drivers of growth. The immediate challenge for Goa, according to ASSOCHAM, will be to cultivate a vibrant entrepreneurial ecosystem in the State. The chamber has identified tourism, marine export and cashew cultivation as areas where Goa can concentrate.
The operative term here would be ‘sustainable and inclusive’ as any project that the State looks to promote has to meet both these concerns, only then will they be acceptable in Goa.
(Alexandre Moniz Barbosa is Executive Editor, Herald)
