Goa caught up in a debt trap

| 25 January 1999 11:47 IST

Goa is slowly getting into a deep debt trap, thanks to its unproductive spendings, huge amount of borrowings and allegedly indiscriminate policy of central assistance based on Gadgil-Mukherjee formula.

Adding to its piled-up borrowings of Rs 150 crore under statutory liquidity ratio, the central finance ministry has now sanctioned yet another SLR-based loan of Rs 50 crore last week to complete the ongoing developmental works.

Though chief minister Luizinho Faleiro feels relieved with the centre partially meeting its demand of total Rs 150 crore, the local ministry officials however wonder how the loans would be repaid, which have mounted to over Rs 800 crore.

With around Rs 10 crore being spent every month only to pay the interest to the Indian government on the loans it has taken, it has come to notice that that state has been actually paying lot more than what it receives from the centre annually.

The eleventh finance commission, which recently visited the tourist state, has pointed out that the state has been borrowing primarily to repay the old debts. "The basic purpose of borrowings to support the development has been forfeited", points out A M Khusro, the commission chairman.

Situation came to such that the government had to borrow Rs 25 crore from the state co-operative bank to partially clear the bills of the PWD contractors. The state's 58 per cent revenue expenditure is also spent merely to pay salaries to the large number of government servants, thanks to the fifth pay commission.

Contrary to this, the amount of central allocation has reduced from around 88 per cent in 1989-90 to around 28 per cent in 1997-98 since funds are now allocated as per the Gadgil-Mukherjee formula, giving more weightage to population rather than population control measures.

Goa, having less number of population and best performance in birth control and infant mortality rate, thus suffers while its high per capita income rate has also become a deterrent in receiving more funds. It has obviously affected state's financial health severely.

The only relief is Khusro's assurance to set up special funds to provide incentives to the states phasing out non-merit subsidies. He agrees with Goa government's argument that weightage should also be given to merit and performance while deciding central allocation.

Being a major exporter of iron ore in the country and a favourite international tourist destination, Goa earns around Rs 2000 crore annually towards the foreign exchange. The finance commission now agrees that part of it should be transferred to the respective state to build necessary infrastructure.

goanews.com is now on Telegram & also Youtube. Kindly subscribe for free & remain updated.


Drop a comment

Enter The Code Displayed hereRefresh Image


Finance