ITcomes as no surprise that Meghalaya should be categorized as one of the least developed states. The state was created without a revenue model in place. From day one it learnt that it could ride piggy-back on a patronizing central government. Meghalaya’s capacity to generate revenue internally has never been taken seriously because the Centre continues to underwrite its profligacy. It is so easy to get money from the Centre especially if the state and central governments are both ruled by the same party. With its huge mineral wealth and abundant natural resources, Meghalaya could have generated a reasonable amount of revenue. If the royalty on coal and limestone was raised and if the check gates and toll gates manned by the Directorate of Mineral Resources, the Taxation and Transport departments were to do their duties honestly; if the ministers and politicians did not channel the money earned from these gates to their private pockets, Meghalaya might have been able to show a better balance sheet. But this has become the rule of the game. Whichever Government is in power indulges in this rent-seeking behaviour.
Rent seeking” as a concept was originated by Gordon Tullock in 1967. Anne Krueger introduced the label in 1974. People are said to seek rents when they try to obtain benefits for themselves through the political system. Business persons align with politicians and pay them for initiating policies that benefit their businesses; not for what is good for the economy. Often the business lobby would get a special regulation passed by the government which hampers their competitors. They then monopolise the trade and make unrealistic profits. The profits from such monopolistic trades are then shared with politicians and bureaucrats. Economists use the term rent seeking to describe people’s lobbying with government to give them special privileges. A much better term is “privilege seeking.”
A state driven by rent seeking individuals promotes a black economy. There are attempts to cook the books at every level. Benami trade where those who are liable to pay income tax, operate in the names of those who are exempted to pay them, deprives the exchequer of huge incomes. In Meghalaya this is rampant. There is collusion and corruption at all levels and this is accepted as part of the system. The economy cannot be expected to be healthy in such a climate of deception and fraud. But unless the central government tightens the belts and insists that states generate a substantial part of their revenues to meet their expenditures, profligacy will continue and states will go on a spending spree without bothering about showing any visible development. The Rajan Committee has rightly castigated Meghalaya as one of the least developed states.