SHILLONG, April 2: The state government’s move to avail loans, one after the other, to bail itself out of financial troubles is slowly pushing Meghalaya into a “debt trap”.
Confirming the worst fears, the Comptroller and Auditor General (CAG) has warned that the state’s borrowing trend has increased by over 63% in the past five years and could lead the state into a “debt trap”.
The CAG report said that the state’s overall debt has increased by 63.22% from Rs 9,485 crore in 2017-18 to over Rs 15,48o crore in 2021 22. Of the total debts, about 73% are internal in the form of market loans, ways and means advances from RBI, special securities issued to National Small Savings Fund and loans from financial institutions. Another 23% is public account liabilities and about 4% is loans from the central government, the CAG had said.
That this disclosure comes at a time when the state government is harbouring dreams of turning Meghalaya into a $10 billion economy does not augur well for the state and its people.
Cautioning the government against taking more loans, Meghalaya Pradesh Congress president and Lok Sabha member, Vincent H. Pala predicted tough days ahead for the state over the dismal financial condition of the state.
Speaking with The Shillong Times on Sunday, Pala said the CAG report is just the tip of the iceberg and “many hidden things will be unearthed in the coming days”.
“This government is in a big problem and the problem will only be compounded in the future,” Pala said while adding that running a government is about dedication whereas the MDA Government is only about luxuries.
Lamenting that the revenue leakage in Meghalaya is very high, he said that the government has to ensure that the revenue is properly collected since the state cannot survive on loans for too long.
He recalled that the government recently passed a deficit budget of Rs 1,592 crore which can be topped-up only through loans.
He advised the government to rectify the errors for the larger good of the state.
The Congress leader’s concerns are not ill-placed if one takes the example of the ailing Power department.
In August 2020, the MDA 1.0 Cabinet approved a proposal from the Meghalaya Energy Corporation Limited (MeECL) to avail a loan of Rs 1,345.72 crore loan for clearing the power outstanding dues, on conditions that it has to bring down the aggregate technical and commercial (AT&C) losses and reduce the gap of average cost of supply (ACS) and average revenue realized (ARR).
The loan was procured under the Atma Nirbhar Bharat Abhiyan which was launched by the central government to infuse liquidity to distressed discoms (read power distribution companies) in the form of loans backed by a state government guarantee.
Three months later, the Asian Development Bank approved a loan of $132.8 million to improve and upgrade the power distribution network in Meghalaya.
More than two years down the line, residents of the state are reeling under a spell of load-shedding with no end in sight to the perennial issue of shortage of power.
Successive governments have failed to implement and commission power projects which could have alleviated the suffering of the citizens.
It was way back in 2012 when the then Chief Minister Mukul Sangma inaugurated the first unit of the 126MW run-of-the-river Myntdu-Leshka Hydroelectric Project and while the second stage, estimated to generate 280 MW of critical power, it has remained on papers only.
The 40 MW New Umtru and the 22.5 MW Ganol Hydro projects were commissioned but they are hardly adequate to meet the burgeoning power demands of the state.
Last year, the state government scrapped the memorandum of agreement (MoA) for the Kynshi Stage-II Hydroelectric Project signed with the Jaypee Group. It also cancelled the Upper Khri Stage-I (15MW) and Stage-II (10 MW) projects.
Though the government signed an MoU with NEEPCO for commissioning of the three-stage Umiam Hydroelectric Project with a total generation capacity of 235 MW, the project would take years to complete.
As it stands, power woes are likely to continue in the stage until sufficient power is available or sufficient rainfall occurs, whichever is earlier.
