The 15th Finance Commission will be visiting the State this week and at a presentation made by the Principal Accountant General before the Commission in Delhi, the State made this request. Whether Goa gets the package or not will depend on how the Finance Commission views the situation when it comes to Goa. But, even if the State gets this package, the financial situation will still not improve dramatically.
In our Review section today, we have presented a summary of the State’s financial position that does not appear to be at all robust. The State has been borrowing to the tune of an average of Rs 231 crore a month this fiscal, with total borrowings till December 31, 2019 amounting to Rs 2,081 crore. When this is added to the debt amount that had accumulated at the end of the last fiscal, it takes the figure to Rs 16,018.37 crore. There is an increase in the fiscal deficit, a drop in the GST collection and the revenue surplus that the Budget presented last year does not appear to become a reality. Defending the loans, the Chief Minister said there is nothing wrong as long as the State does not default on the payments. That being true, Goa also needs to look at increasing its revenue.
Currently the State is awaiting the green signal to mining operations, that it expects will help balance the coffers; and has also dispatched a note to all government departments calling for spending cuts. Mining to some extent will help, but the experience of e-auction of mining dumps does not offer much hope, as the interest in the Goan ore has not been high. On the other hand, the proposed cut in government expenditure is an annual occurrence as the State comes close to the financial year end, and this will bring about a very negligible saving, as only expenditure that can be avoided is postponed to the next financial year. It is not permanently stopped.
In the light of this, there is no doubt that Goa’s financial situation is indeed precarious and the State needs some innovative thinking if it is to improve its finances. GST that was expected to increase the revenue has till now not made any positive difference to the exchequer. Goa will have to look at ways to increase non-tax revenue and also rationalise expenditure, whereby spending on schemes may have to be reduced. The first major task would be to identify the leakages and plug them, which means improved transparency and accountability in the bureaucracy, with tight audits to keep track of where the money goes.
The Budget for the coming financial year will be tabled next month, and the Chief Minister has the opportunity to bring in some changes to the system that would improve the revenue generation. This will be his first full Budget, he having taken office in March last year after the Budget had been presented. In view of the ongoing development activities the government would not be able to cut down on allocations to its various departments and to local bodies, but it can bring in a mechanism that would effectively monitor the cash flow and would report on where wasteful expenditure can be curbed. There has been a surge in spending, there has to be a corresponding increase in earnings, and this is what the Chief Minister should look at doing in his Budget.
