Why Goan economy is in shambles ?

| 07 December 1999 17:54 IST

Total collapse of political stability, development without a foresight or plans and high spending without matching it with revenue generation measures are the internal factors whereas total absence of merits and performance as a criteria applied for the central assistance is a major external factor responsible for pushing Goa into a deep debt trap, despite it being the youngest state of the country.

While the tourist state was liberated almost 14 years after India got independence, it attained statehood only in 1987, giving up its identity as the union territory. In spite of excellent population control measures followed in this health-conscious state having 75 per cent literacy rate, its population today is more than double – almost 15 lakh since its liberation in 1961.

The prime reason is continuos inflow of outsiders as Goa does not have the kind of labour – skilled, semi-skilled and unskilled - it requires for the industry it generates. While education policy is still not prepared in tune with the developmental plans, the industrial policy is just taking shape amidst continuing protests over pollutant plants being allowed to be set up.

The state administration has been the major employment generation agency in the state right from the first elected government took over in 1963, most of which was initially also imported from neighbouring states of Maharashtra and Karnataka. Government service is still the status symbol here, which is capitalised upon by the politicians to create vote banks, no matter how much pressure it puts on the state treasury.

Every 30th Goan is a government servant here which has obviously brought tremendous pressure on Goan economy, especially from the time fifth pay recommendations are fully implemented. Over 58 per cent of revenue expenditure of the state goes into paying only the salaries.

The major source of revenue generation, on the other hand, is only through the sales tax and excise duties, covering 83 per cent of the revenue generation area. But it is also affected due to sales tax exemption granted for 10 to 15 years for the new industries, the policy existing here since 1972.

Though recently toppled former chief minister Luizinho Faleiro had withdrawn 50 per cent of exempted sales tax and stopped tax holiday for the new industries from October onwards, his step came under heavy criticism because it was a sudden step taken unilaterally, which took the industry as well as labour fronts by surprise.

Francisco Sardinha, the 12th chief minister in last nine years, has now reversed the policy while declaring much in advance that that the tax holiday would end from April onwards. He is now trying to tap other areas for additional resource mobilisation.

The eleventh finance commission, which had visited the state last year, expressed grave concern over the state's increasing attitude to borrow, not to spend on developmental plans but to simply pay back the interest on the previous borrowings. The share of borrowing has increased from 17 per cent in 1997-98 to 30 per cent in 1999-2000.

The latest figures worked out by the state finance department show a total debt liability of around Rs 13,000 crore, over six times than the size of Goa's annual budget. The annual interest itself works out to Rs 11 crore per month while the payment of principal amount crosses the figure of Rs six crore every month.

Around 72 per cent of these borrowings are from the central government alone, right from the loans towards the state plan of over Rs 357 crore to Rs 214 crore of SLR-based market borrowings. Though Goa has not been categorised as a defaulter till date, the payment of loans has already gone beyond control.

Though Goa witnessed 12 chief ministers in last nine years, all of them and even the governor who ruled the state during imposition of the President's rule have agreed on one point – step motherly treatment given by the centre in allocating funds to Goa. The criteria laid down in the Gadgil-Mukherjee formula is totally unjustifiable.

As population and poverty are given more weightage in central allocation, Goa's excellent performance in making the locals health-conscious and educated has cost the tourist state dearly. Its central share of 88 per cent in 1989-90 has presently come down to mere 15.5 per cent.

The eleventh finance commission, in principle, has now agreed to set up special funds to provide incentives by giving weightage to merit and performance. Taking notice of the fact that Goa contributes around Rs 2000 crore annually in terms of foreign exchange through mining and tourism, it has also agreed to shell out some amount of it to build state's infrastructure.

The growth in the tourism industry in the meanwhile is on decline while industrialists also shy away from Goa, primarily because of poor infrastructure. In fact Goa did not benefit much in spite of extending five-year income tax holiday till March 2000 due to high court ban on new power connection, which has been partially lifted at the fag end of the deadline.

Besides improper road structure, inefficient power supply, inadequate water supply and poor communication system, law and order is also the issue which is not fully arrested. The tourism industry is in fact getting severely affected due to harassment by taxi drivers as well as the local police, who allegedly threaten to plant drugs on foreigners while demanding foreign currency from them.

The crime rate of the state is otherwise not alarming while the detection rate has also crossed the figure of 55 per cent. The only goodwill with which Goa is still surviving however is its natural beauty, peace-loving people and highly respected communal harmony which tempts anybody to come to Goa – as a tourist or to set up business.

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