SHILLONG, Sep 3: The state government has downplayed the latest report of the Comptroller and Auditor General cautioning Meghalaya about falling into a potential debt trap.
Commissioner and Secretary of Finance, Vijay Kumar D said in a statement on Tuesday that debt is a public finance instrument to boost growth, which is used by all the countries.
“The net borrowing limit of the state is determined by the Government of India. Hence, no state can borrow more than the prescribed limit. These borrowed funds are used effectively to invest in critical infrastructure. That is the reason the state is leveraging on the 50-year interest-free loan to increase capital spending,” the statement said.
It added that the capital expenditure (Capex) almost doubled from Rs 1,903 crore in 2018-19 to Rs 3,362 crore in 2022-23, indicating that debt should be seen as a strategic investment in Meghalaya’s future, not a challenge or burden.
According to the statement, the outstanding debt (OD) stood at 32.22% of the GSDP in 2018-19 and it increased to 43.19% in 2022-23.
Kumar also said the OD after Correction 1 (revised GSDP by the Ministry of Statistics and Programme Implementation) was 33.02% in 2018-19 and 39.62% in 2022-23, and that the OD after Correction 2 (Revised GSDP excluding Capex) was 33.02% in 2018-19 and 36.33% in 2022-23.
“After making both the corrections, the debt-GSDP figures are much lower at 36.3%. Though this figure is high, the state is putting in place a sustainable debt path to ensure that the debt levels are within the prescribed limit to meet the twin objective of achieving the $10 billion economy and maintaining fiscal prudence,” the statement said.
Reacting to the reports that Meghalaya’s $10 billion economy dream is dented by highlighting various fiscal parameters, Kumar depicted the “reality” of the fiscal parameters. He said the CAG’s report on GSDP numbers was finalised much before the release of the revised GSDP numbers by MoSPI in August 2024.
The statement said Meghalaya’s GSDP growth narrative is undergoing a significant revision with updated MoSPI figures. “Integrating the latest MoSPI data, Meghalaya’s economic growth exhibits a remarkable 17.4% CAGR from fiscal 2020-21 to fiscal 2022-23, and with a robust 11.14% CAGR from fiscal 2019-20 to fiscal 2023-24, Meghalaya is poised to reach its $10-billion economy target by 2027-28, aligning with strategic objectives,” it added.
The statement said the 50-year interest-free loan provided by the Centre is not a liability, although it is considered as a loan by the CAG.
“It is linked to quality of expenditure and is performance-based for the states. The state has been effectively utilising the SASCI. Consequently, the release from the Centre has increased from Rs 200 crore in 2020-21 and Rs 281 crore in 2021-22 to RS 1,049 crore in 2022-23 and Rs 1,293 crore in 2023-24,” the statement said.
It also said the state is expected to receive Rs 2,085 crore in 2024-25.
“The Capex is a component of the capital outlay and is included in the calculation of the fiscal deficit. Therefore, in order to help the state increase its capital spending to strengthen the socioeconomic infrastructure, the same is to be excluded from the calculation of the fiscal deficit and debt-GSDP,” the statement said.
