By Patricia Mukhim
Meghalaya’s Chief Minister has a rocking CV. His Bachelors Degree in Business Administration was on entrepreneurial management from the noted Wharton Business School, University of Pennsylvania. He later completed his MBA with specialisation in Finance from Imperial College London. Unfortunately, business schools don’t train people in managing public finances where the success of an investment is not weighed by monetary gains but by the number of people lifted out of poverty, where and what quality of roads are constructed, what educational gains are made in terms of schools, colleges and universities built and the educational outcomes from those institutions. B-Schools also don’t teach that health and nutrition are social sector investments whose outcomes cannot be measured monetarily but by human development indices.
Conrad Sangma would have made a good corporate CEO and managed the finances of a company excellently because companies work for profit. A financial manager that does not rake in profits for the company – in other words for the shareholders who invest in it- would soon lose his job. Companies pay good money for a financial expert because he is the pivot around which the company revolves and on which lies the onus of raising the company’s stature. And the stature of any company is judged by its financial status. The world is talking of Elon Musk because he has dollars to back him up. Whether it is acquiring Twitter and other influential companies Musk has done it all.
Alas! Conrad Sangma is not running a company with a limited number of employees and shareholders. He is running a state with a population of 3.4 million where each individual must feel the impact of financial investments made by the mother company – the Government of India. The crores that come in must be put to good use and every penny must be accounted for. But that is the point of departure between running a company and being the head of a state. As the Chief Minister of Meghalaya Conrad Sangma must be audited regularly for his performance by the people. Sadly, he leads a state where most people prefer to remain silent or to just gossip about corruption.
In recent times several questions have been raised by the Trinamool Congress (TMC) on the manner in which externally aided projects (EAPs) have been utilised in Meghalaya. The TMC took pot-shots at Mr Vijay Kumar who was behind the initiation of the Company – The Meghalayan Age Ltd. Mr Kumar has not clarified if the Company was formed under the Companies Act 1951. If so, it is bound by the law. Hence the shareholding pattern, audited statement of accounts, board of directors, details of the Company Secretary, annual general meeting resolution, board meeting minutes etc., all have to be put up in the public domain. But on visiting the company website one cannot glean much information except that it has a paid up capital of Rs 1 crore. Since this is a government company the paid-up capital is from the government coffers.
A government company is one in which the State Government holds 51% or more of the paid-up capital. Government Company, also called a public enterprise or state enterprise works in the same pattern that other companies registered under the Companies Act do. It has a separate legal entity. It can sue and be sued and can acquire property in its name. One important aspect about Government companies at the state level is that their annual reports are required to be presented in the Assembly and in case of central government held companies the reports are to be presented in parliament. Has the report of The Meghalayan Age limited been put before the Assembly and discussed? If not, why not?
A government company is also managed by a Board of Directors. All the Directors or the majority of Directors are appointed by the government, depending upon the extent of private participation. In the case of The Meghalayan Age Ltd it is not known if there is private participation. The accounting and audit practices are similar to those of private enterprises, and the auditors are Chartered Accountants appointed by the government. Further the employees in a private government company are not civil servants. The personnel policies are regulated according to the articles of association.
Most often as in the case of The Meghalayan Age Ltd the management of the companies is generally managed by administrative service officers who often lack experience in managing the business organization on professional lines. Hence in most cases, they fail to achieve the required efficiency levels and objectives of their creation.
The policies and management of these companies generally keeps on changing with the change of government. Frequent change of rules, policies, and procedures leads to an unhealthy situation that mars the business enterprise. The Meghalaya Basin Development Agency too became a company – Meghalaya Basin Management Agency (MBMA). It is learnt that most external funding agencies prefer to fund states that show innovation and The Meghalaya Age Ltd has been much appreciated as a vertical for international funding for various projects that the company takes up – through the much touted externally aided projects.
The questions today is how have these EAPs fared. Let’s just take an example of Megha-LAMP. The project is worth Rs 811 crores. The project timeline is from 2014 to 2022. Any EAP doesn’t extend beyond 5 years. In this case up to September 2021 an expenditure of only 46% has been incurred. And forget about the physical output/ outcome which again is a grey area. Has the International Fund for Agricultural Development (IFAD) or the Ministry of Finance taken stock of this EAP? Out of Rs 811 crore IFAD is giving only 298 crores. There is a bank loan of Rs 146 crore. Who is servicing this bank loan? Definitely, the Government of Meghalaya! May we ask the rate of interest for this loan? All this debt burden will have an impact on the future generation of Meghalaya.
A similar kind of analyses is required for other EAPs too. There are many overlapping activities out of these EAPs with the existing schemes of Government of India (GoI), whether that be for rural financing, agricultural activities, water resources, forestry, livelihoods, rural roads etc. The question that arises is why the implementation of central schemes is so shoddy in Meghalaya even while EAPs are also thriving. Meghalaya prefers to use the EAP instead of GoI funding as monitoring is more stringent and compliance are tougher such as production of utilisation certificates, release in tranches, completion certificate etc. EAPs on the contrary are easy money with little to no monitoring or oversight.
If in the past the EAPs in Meghalaya could be implemented through MBDA, MBMA under the aegis of Planning Department then what was the need of creating one more company in the name of The Meghalayan Age Limited? The raison d’etre should be made known to the public, particularly when the same directors of previous companies are the current directors. Then there was also the issue of giving contract to the firm of the spouse of the CEO. The whole thing smacks of oligarchy and nepotism.
Every State including those from the North East has an EAP kitty with the Ministry of Finance which should be used with utmost prudence. Projects with clear deliverables and tangible outcomes have to be designed and proposed. It is time to evaluate all the EAPs being implemented in Meghalaya under different acronyms and to see whether the outcomes are as stated at the time of making the loan proposals.
From the look of things in Meghalaya, especially in rural Jaintia Hills, West Khasi Hills and Garo Hills and its shameful socio-economic indicators which are today the subject of discussion across the country, including that of Meghalaya being the poorest state, not much has been delivered on the ground by the EAPs. So where has the money gone? Who are the beneficiaries? It’s time for the people of Meghalaya to ask these pertinent questions.