Goa, development and loans? http://www.oherald.com
Will human development in the Budget through loans be feasible? Will high borrowings and expenses in Budget lead to a debt trap? Is our Goa Budget a penny wise pound foolish concept? By Juino de Souza The chief minister last week presented his Budget and the mood in the ruling BJP camp is up-beat, at this opportune moment when the political parties are gearing up for elections. The Budget has laid stress on education, health, and provided for major investment in infrastructure, which is to advantage of Goans. The opposition Congress, which is without teeth, staged a walk out while terming the Budget as a Bania Budget. They were unable to point out instant flaws and raised extraneous non-relevant issues. Sparks did fly in the Goa assembly over the additional need for raising Rs. 365.5 crores in the form of supplementary demand with the Opposition worried it would create a debt liability. The chief minister sought to justify the need. The Budget, overall, is a balanced one with lots of sops and covering a wide ambit of activity in all areas, and which is a positive sign. If however one looks at the figures, we find a major hurdle by borrowings through loans creating liability of 28 paise for every rupee spent which is on the higher side. Expenses on salaries, wages, pensions, gratuity that is 25 paise per rupee is also very high and needs to be curtailed. On the income side, 38 paise from every rupee comes from taxes and is insufficient to meet costs. The major folly lies in bringing quick reforms and changes overnight, which entail large expenses and requires huge funding. It is not practicable to change the face of Goa overnight in a hurry, as even powerful Rome was not built in a day. Goa, a tiny state with small size of population, poor industrial growth and dwindling revenue, will strike an imbalance between income and expenditure and ultimately reach to a complex financial crises causing more complications and confusion rather than offering ready solutions. The Budget also talks of human development by improving the quality of life; but at what cost? Can the Goans be developed financially, emotionally, physically or mentally through loans? It is like robbing Peter to look after Paul. The State has to learn to stand on its own feet and cannot depend on assumption of transfer of Central funds. What if such Central funding does not materialize? The emphasis has to be in self-reliance through financial independence. The other problem is that Government seems to be getting more and more involved in the construction and infrastructure development business, and that too through public sector corporations. Why? Over the last year we have seen formations of several new corporations including the high profile Goa Infrastructure Corporation of which the chief minister is the chairman. The funding of these corporations is through loans on interest, even though the rates of interest may have come down, yet with the high cost of capital and low returns on investment the financial health of the State could end up in a disastrous situation. Who will bear this burden of debt? Goa does need infrastructure, but the same should be developed in phases with proper planning and control uniformly. The Government must spell out the ways and means to work generate and raise funds from their own resources rather than depend on external borrowings. Thus while bridges, subways, four-lane roads, a film city complex, river dredging, and other infrastructure is welcome, the same cannot be at the cost of loans. This could see Goa falling in to a debt trap. One also notices that the infrastructure of state-capital Panjim is being developed rapidly, while rest of Goa still lacks in basic amenities of good roads, proper water supply, and electricity supply. The chief minister, has control of a number of portfolios, and also holds post of chairmanship in at least half a dozen corporations. How can he do justice to all jobs single-handed? It is well known that the chief minister takes all decisions by himself and shuns participative management. Therefore there are long queues of visitors to meet him while the other ministers' chambers are empty. This should change with delegation of responsibility. The Goa Infrastructure Corporation has embarked on projects worth hundreds of crores of rupees and for which tenders have been floated and contractors are being short listed. Now, citizen groups are demanding that the Right To information should also cover Goa-run corporations, so that public are aware and have easy access to almost all Government documents including tenders and quotations, names of contractors, criteria of selection, conditions of the contract, and other such data to ensure that there is check on Government and transparency is maintained in allotment of contracts. Although Mr Parrikar has managed to carve a niche for himself among Central leaders, his policies are totally reverse of decisions taken by the Government of India where public sectors corporations are being sold and dis-invested due to poor return on investment. Some of the top blue-chip profit making public sector companies have been put on sale and that too at discounted rates. In fact almost all successful countries of the world avoid public sector businesses and concentrate on raising resources through alternate methods of taxing the private sector for funding large social development programmes in education, health, water supply, sanitation, housing, and other such social infrastructure. Therefore, there is no reason why the Goa should not encourage the private sector to invest in infrastructure development. The Government should retain the role for administering and regulating industry and business only for preventing and exploiting monopoly, and for maintaining health and other such essentials. The Government can very well offer incentives to the private sector in the form of Build, Operate, Own and Transfer (BOOT). Business run through newly created Corporations also give rise to public suspicion of political corruption. This can be illustrated by the staggering sums of money paid by contractors to secure large Government contracts at enterprise levels. The view doing the rounds is that major contracts would go to Mumbai and overseas contractors who are not only better equipped and managed, but also pay handsome kick backs and commissions, which sums are deposited in private and overseas bank accounts thus maintaining absolute secrecy and confidentiality. On the other side, the Government expenses are mounting, with promotions, hike in salaries, upgrading and renovating swanky government corporation offices with inlay of granite and marble decked with air-conditioners, purchase of luxury vehicles, foreign jaunts, new recruitments, besides the cost for undertaking development projects. Our Government will have to do some quick thinking or soon the best financially managed state will be first in the list of bankrupt states. It is a piece of marvel how when Budgets are presented, accounts and figures depict a rosy picture due to intricate window dressing by expert chartered accountants who are masters in accounting techniques and calculation jugglery. The chief minister has excelled in putting his best wares in the showcase. The Government should, under these circumstances, immediately declare austerity and cut wasteful expenses. Corporations should be set targets for attaining profits. It is extremely worrisome whether there will be any money in the kitty for public welfare schemes, after paying emoluments to the huge and growing government staff, cost of debt servicing, and at the same time improving the cost-effectiveness of public services which has received a set back. Sick government corporations should be dismantled and sold. Government should endeavour to concentrate in pumping funds to bring transparency in administration at grassroots levels in panchayats and Municipalities where corruption is rampant due to administrative hurdles that encourage procedural delays. The Government must strive to save communidades and show the way for a healthy debate. The outdated Portuguese laws need to be revamped. The Government must learn to respect and honour High Court judgements as in the mundkar case instead of bringing amendments in law in favour of mundkars for the sake votes. It is good to hear that auxiliary police force is being raised, this should also replace the private security force that will save costs of guards posted even vital sensitive spots such as the Secretariat and assembly complex besides a number of corporations and other government agencies. While the Parrikar Government deserves credit for its political intelligence, it is high time for some introspection and self examination to eliminate the Capital I and me factor so that ego vanishes and the Government together works for the welfare of the people. ########################################################################## # Send submissions for Goanet to [EMAIL PROTECTED] # # PLEASE remember to stay on-topic (related to Goa), and avoid top-posts # # More details on Goanet at http://joingoanet.shorturl.com/ # # Please keep your discussion/tone polite, to reflect respect to others # ##########################################################################
