SHILLONG, Sep 1: The latest report of the Comptroller and Auditor General of India (CAG) has shredded Chief Minister Conrad K Sangma’s dream of turning the state into a $10 billion economy.
The report said Meghalaya’s gross state domestic product (GSDP) growth in 2021-22 and 2022-23 lagged behind the national GDP growth rates of 18.36% and 16.06% respectively. Meghalaya’s per capita GSDP was also lower than the per capita GDP of the country from 2018-19 to 2022-23.
The state again slipped into revenue deficit in the last fiscal after achieving revenue surplus of Rs 653.92 crore during 2021-22, the CAG report said.
The report pointed out that the state continued to fall short of meeting the target set for fiscal deficit-GSDP and liability-GSDP ratios set in the Meghalaya Fiscal Responsibility and Budget Management (FRBM) Act, 2006.
The fiscal deficit increased from 5.71 per cent in 2021-22 to 6.55 per cent of GSDP in 2022-23, which is above the target of 4 per cent set under Meghalaya FRBM (Amendment) Act, 2022.
Further, the state has failed to achieve the target for total outstanding liability-GSDP ratio prescribed by the Meghalaya FRBM Act since 2018-19. The ratio has not only remained above the prescribed target but also continued to increase over the five-year period.
During 2022-23, targets recommended by the 15th Finance Commission as well as targets fixed by the Budget 2022-23 for revenue surplus/deficit as per cent of GSDP, fiscal deficit as per cent of GSDP and total outstanding liabilities as per cent of GSDP were not achieved.
The CAG has highlighted the urgent need for strategic economic initiatives in the state, including diversification infrastructure investment, tourism promotion, and prioritising education and skill development to improve its GSDP.
According to the report, following 2.86 per cent contraction in GSDP during the 2020-21 fiscal, the state demonstrated a notable recovery, achieving an impressive growth of 14.83 per cent in 2021-22. Yet, the GSDP growth during 2022-23 declined to 10.09 per cent.
Moreover, Meghalaya’s GSDP growth in 2021-22 and 2022-23 lagged behind the national GDP growth rates of 18.36 per cent and 16.06 per cent respectively. The state’s per capita GSDP was lower than the per capita GDP of the country from 2018-19 to 2022-23.
Revenue receipts and revenue expenditure rose by 3.82 per cent and 9.13 per cent respectively from the previous year. However, they fell short of budget estimates by 7.58 per cent and 3.33 per cent. Decrease in grants-in-aid and contributions, and lower non-tax revenue collection shifted the budget from revenue surplus of Rs 653.92 crore in 2021-22 to revenue deficit of Rs 43.90 crore in 2022-23.
The Budget projected a surplus of Rs 659.82 crore, signifying higher expected revenue.
However, actual non-tax revenue fell short by 37.51 per cent, and grants-in-aid were 31.54 per cent below the budget estimates. Tax revenue collection exceeded the budget estimates by 12.42 per cent, resulting in an overall 7.58 per cent shortfall in revenue receipts.
In the capital budget, receipts amounted to Rs 6,245.23 crore (including WMA & SDF of Rs 3,164.09 crore), surpassing the Budget Estimates by Rs 3,580.19 crore – a 134.34 per cent increase. Capital outlay reached Rs 2,742.28 crore, exceeding the Budget Estimates by Rs 2,462.63 crore.
Regarding fiscal parameters in 2022-23, the state fell short of maintaining revenue surplus as mandated by the MFRBM Act. The fiscal deficit as a percentage of GSDP reached 6.55 per cent, and the outstanding-GSDP ratio was 43.19 per cent, missing the Meghalaya FRBM Act targets of 4 per cent and 28 per cent respectively.
Over the past five years, the state failed to meet the targets for revenue balance and fiscal balance in four years, while the outstanding liability-GSDP ratio consistently exceeded the 28 per cent limit.
The CAG recommended that in order to achieve comparative growth rate at the national level, the state government may make efforts to improve its capital spending which will act as a facilitator for private investment in all sectors of the economy.
The state government may make efforts to achieve the projections and targets on major fiscal parameters, made in the Meghalaya FRBM Act through prudent financial management, the report added.
