John Noronha
f late the State government has become a punching bag of sorts, from being called out as inefficient in handling the COVID-19 to the ballooning State debt and borrowing. Taking a different perspective than the obvious, it’s not enough to point out but to find a way to solve the problem and move on. Keeping in mind that there are no shortcuts and that the solution will take time to propagate, we need to analyse every aspect thoroughly.
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It’s common knowledge that the State has been banking on the mineral and tourism resources in the past and like everything evolving around us, there is a need to look beyond the comfort zone. It’s clear that the Centre is having its hands full and demanding financial aid becomes redundant in the light of the increasing COVID-19 infection numbers. Referring to our national debt to the World Bank, the figures are revealing and difficult to comprehend at first glance. The World Bank is made up of two organisations – the International Bank of Reconstruction and Development (IRDA) and the International Development Association (IDA). While the IRDA advances loans to middle and lower-income countries, the IDA advances interest free loans – or credits – and grants to the poorest of countries. India currently owes the IRDA US$ 14.58 billion and just above US$ 1 billion to the IDA.
Considering our State debt at above 15,000 crores, the government is walking up a steep and slippery slope. Although we have every right to ask our government for compensation and monetary packages during the COVID-19 crisis, it’s not possible to argue with facts and data. I appreciate the way our State government is trying their best to contain the situation and put up to negative remarks of the electorate and the Opposition.
Since everyone is talking about the elephant in the room, it’s time to decide what to do. The Economic Revival Committee in its preliminary report recommended that there must be an increase of agriculture and revival of mining and tourism industry. Personally, I feel that this report is a letdown, as the recommendations are common knowledge and not expected from such distinguished members. There is need to for out-of-the box solutions as it’s apparent that as things get from bad to worse, there will be no saviour or lender of last resort. During ‘The Panic of 1907 in US’, which saw the creation of the Federal Reserve and signing of the Federal Reserve Act, 1913, it is the business and political community that came together to overcome the crisis.
The current monetary system follows Fractional Reserve Banking and not the Gold Standard, wherein debt is encouraged and offered at attractive rates. Given the present RBI CRR Rate of 3%, there is 97% of generated Debt. In a booming economy, this would be stimulus for growth but in times of a bust economy, the debt becomes difficult to manage. However, there is no need to do great things at one time but rather small things over a long time.
The following baby steps can go a long way to reduce, if not halt the Debt trap:
1. Austerity measures: Our Governor has shown the way in these difficult times how it can be done. There is a need to adopt and implement the same in the government machinery and our homes. There is much wisdom in the old adage – ‘A penny saved is a penny earned’.
2. Setting an example: If each of the 40 MLAs donates 1% of their declared assets to the State coffers, it would set a precedent for others to look up to and it wouldn’t hurt their chances of getting re-elected.
3. Render to Caesar the things that are Caesar’s: If every Goan pays the dues owned to the State machinery, there would be operating capital to work with. Be it house taxes, rent or fees to the municipality/ panchayats, it would begin revival from the grassroots and a strong foundation can take the weight of a larger structure.
4. Promote Goan ethnicity: We must begin promoting and marketing ethnic Goan products such as Goan fruits and beverages. With just banana’s and coconut derivatives, Kerala has a large market for its ethnic products.
5. Invest in the Next Generation: The students who will be in Std. X and XII are the future that we must invest in. The students of today are the hands that will build our tomorrow. They must have a willingness to stay back in Goa and contribute to its GDP, rather than seek options or greener pastures Overseas.
As quoted by Lao Tzu – “The journey of a thousand miles begins with one step.” This can be our first step toward making ourselves ‘Atmanirbhar’ (Self-reliant). We can learn from the 2008 Irish Economic Downturn … that desperate times call for desperate measures.
