The State’s financial situation is not all that sound. This is an admission by Chief Minister Dr Pramod Sawant, who in his Liberation Day address said, “Due to various reasons, State’s financial position has been affected. Government is making various efforts to improve the situation and in coming days, we will see some results.” A day earlier, Sawant in the national capital for the GST Council meeting, had sought a special financial package from the Union Finance Minister Nirmala Sitharaman to deal with the direct revenue loss of Rs 1400 crores on account of closure of mining industry in the last few years.
The news is hardly surprising, but the admission on this count from the government most definitely is. And if a government admits to a shaky financial situation, then it means that it can be construed to mean that it is quite precarious. No Chief Minister or Finance Minister would be pleased to state that the finances ‘have been affected’. In fact, in September this year the Chief Minister had refuted charges that the State was facing a debt trap. Yes, Sawant does promise that the situation will improve but there is no revelation of what are the plans to bring about the change for the better. Currently, the government has been selling bonds – it is within its capacity of selling government stock – to increase its financial position, but that comes at a cost of interest repayment.
Goa’s debt situation is worrisome, and is fast approaching a crisis situation. It has been progressively increasing, mainly through the sale of bonds. In a reply to a question in the Legislative Assembly in July this year, the government had said that in 2015-16 it had sold stock worth Rs 1,450 cr, in 2016-17 it was Rs 1,320 cr, in 2017-18 it was Rs 1,800 cr, in 2018-19 it amounted to Rs 2,350 cr and in 2019-20 Rs 400 cr till July. That amounted to Rs 7,320 cr to which can be added the sale of more bonds worth another Rs 200 crore. Recently, the opposition Congress, pointing out that accumulated debt had risen to Rs 20,485 crore – of which Rs 13,000 cr was in the last seven years from 2012 to 2019, had said that this works out to a Rs 1.5 lakh debt per person in Goa.
With its main revenue generating sectors facing a crisis of their own – mining operations have been shut and tourism is facing a drop in arrivals – the State needs to look elsewhere to shore up its revenue, failing which the situation can only worsen. Manufacturing has never been a major contributor to the exchequer, and the primary sector is surviving on subsidies. Goa has only the tertiary sector to look for now, but the growth in this segment has been minimal. The State would actually need to aim for a complete financial revamp, whereby it can reduce debt and increase earnings. Its debt servicing and subsidy payouts are not helping improve the situation.
The State needs out-of-the-box solutions to handle its financial crisis. It cannot hope to get revenue by the traditional methods. For starters, the State has to look at reducing the amount in subsidies that it pays out on a monthly basis. In various schemes the government has been able to weed out beneficiaries who were not eligible but were still being paid subsidies by the State. These have been stopped, but this has been a drain on the exchequer that the State can’t afford. This is a start, but it is not enough. There is much more that needs to be done, if the State’s finances are to be balanced without taking loans or selling bonds.
