Most Goans are debt averse, not that they shy away from taking loans, but the reason has to be compelling for them, to take the loan route. Reasons for availing loans could be for new businesses, working capital requirements, expansion for existing business, or when there is an opportunity to invest in an asset which is available at mouth watering valuations. If the reasons are not very convincing, you will hardly see Goans queuing up at banks to take loans. It’s another matter that some of them do succumb to social pressures of buying the latest gadgets that seem to always keep coming in the market, combined with the hard-selling tactics deployed by banks, in promoting their loan products. But generally it will be safe to assume that Goans that visit banks will mostly be to withdraw their own money or deposit their own money in their own accounts.
Historically most Goans have tried to play safe with their finances, even at the cost of earning a reputation of not having the animal spirit of risk taking, and all this could be attributed to our trait of not taking unnecessary loans which they cannot service. If loan taking is not such an acceptable thing among Goans, than how come we allowed the Government of Goa to pile up such a mammoth loan on the state of Goa. As per last count, the loan was nearing Rs 15,000 crores and counting. Hope it’s not a case of total ignorance of those who have been given the mandate to decide our finances, as they seem to have totally failed to understand the gravity of the situation. Ignorance because many of the representatives we choose, might not even know off-hand how many digits make a Rs 15,000 crore.
Many might wonder as to why an ordinary Goan should scratch his head and bother about the debt the Government takes on. After all it’s a government problem and not their personal financial matter? Optically that might look true, but here is a simple math that will make you realise, that you need to very concerned when governments run their affairs by taking huge loans. Just divide the figure of Rs 15,000 crore by the total population of Goa and you will arrive at your share of the loan you will have to pay indirectly for the government largesse. The answer you get might not look very alarming but the bad news does not even end there; the figure only increases once you take into account only tax payers that will have to foot the bill, and divide the loan amount with tax payers only. A simple math such as this, should easily demonstrate that the situation is getting worse for Goans that are feeding the government in the form of tax revenues, while getting more and more lucrative to those that have learnt the art of milking the government in the form of grants, subsidies and schemes.
When the government realises that they have squeezed the taxed Goans enough, for the time being and that there is no more juice left, they then go after generating revenues from casinos and what not. After all they have to fulfill the obligation of feeding the many parasites they have created over a period of time. Apparently even those revenues are not enough to offset the expenses, hence the unsustainable debt.
The recent pulling up of the government by the Comptroller & Auditor General (CAG) is fair enough, it suggests that the government should get its act together and have a debt repayment strategy in place. Looks fine on paper, but how does a government prepare a debt repayment plan without taxing further the already hassled tax payers. Remember collecting taxes is the major revenue tool a government uses.
All this loan repayment theory to have some credence has to be directly linked to cutting costs. Without cutting costs if focus is given only on revenue generation by taxing the tax payer, would be like killing the tax payer which lays the golden egg. Honestly the state of the Goan tax payers, barring the chosen few, is so terrible, that it hardly has the strength to lay that golden egg. Nevertheless time has come to eliminate many of the schemes that have been a burden on our finances or risk the option of a bankrupt Goa. Unfortunately Goan politicians get away with such high debt levels, because it is a state and not a public limited company.
True, a state cannot be treated like a public company, but the advantage in public companies is expenses are pretty much matched by revenues and if the company goes for debt then they better have a good reason for it. Remember there are outside stakeholders and analysts reviewing your figures all the time and reward or punishment is meted accordingly as the case maybe. A high debt company will always be questioned about their repayment projections, while politicians of a state like Goa will get away pretty much talking nonsense.
The new political party AAP, if at all wants to take a real shot to form the government in Goa, should first come out with a real debt repayment plan of this burgeoning debt that Goa has. It’s all easy for the AAP ministers of Delhi to come to Goa and promise free this and that. Goa is already grappling with too many freebies being given to undeserving individuals and unworthy causes. We don’t want another party with the same mindset that adds to the misery of the taxpayer.
By the way did you take the calculator and work out the math of calculating the loan amount of Goa with the population or the number of tax payers. Do that, the figure is sure to remind you, that even though you maybe are individually debt free, the government has made plans to keep you always in debt.
(The author is a business consultant)
