By Our Reporter
SHILLONG, Sep 4: The Meghalaya government has rejected the observations of the Comptroller and Auditor General (CAG) that it might fall into a debt trap considering the huge loans it is taking.
Chief Minister Conrad K Sangma and officials of the Finance department held a marathon press conference on Wednesday during which PowerPoint presentations were given in response to the CAG’s observations.
Sangma said debt is a public finance instrument to boost growth which is used by all countries to finance their infrastructure projects. He said the net borrowing limit of the states is determined by the Government of India and the Meghalaya government has always borrowed within the limit.
According to him, these borrowed funds are used effectively to invest in critical infrastructure. The Capital Expenditure for the state has almost doubled from Rs 1,903 crore in 2018-19 to Rs 3,362 crore in 2022-23 which indicates that debt has been effectively utilized, he said, adding that it should be seen as a strategic investment in Meghalaya’s future, not a challenge or burden.
“…the debt-to-GSDP ratio is close to the Government of India’s prescribed limit of 28% and on a downward trend. Under all three scenarios, the ratio will eventually fall below the limit by 2027-28. Hence, the question of the state falling into a debt trap does not arise,” Sangma said.
On the matter of the state being a revenue deficit, he said it is the excess of a government’s total revenue expenditure over its total revenue receipts.
The CM said Meghalaya’s revenue balance swung from a surplus of Rs 654 crore in 2021-22 to a deficit of Rs 44 crore in 2022-23, largely due to a court-ordered disruption in mining activity, which impacted non-tax revenue. However, through enhanced fiscal discipline, the state has turned this deficit into a surplus of Rs 1,408 crore in 2023-24, he added.
He clarified that the growth rate of GSDP for 2022-23 over 2021-22 is 15.6% and not 10.09% as stated by AG, adding that the AG numbers for 2022-23 got finalized in June 2024 (y-2) while MoSPI gave final numbers of 2021-22 in August 2024 (y-3). The quick GSDP numbers of 2022-23 will become provisional early next year.
Regarding GSDP, the government reiterated that the state is on track to achieve the US$ 10 billion economy target by 2027-28. It said the state’s fiscal deficit is within the limits set by the Government of India.
The increased fiscal deficit as shown in the AG report is due to the inclusion of SASCI funds in the debt accounting. The state government is taking up the matter with the AG and the Finance Ministry for rectification.
Sangma said the state is on a sustainable debt-to-GSDP path and on track to achieve the FRBM target by 2027-28. He said the question of the debt trap does not arise.
Stating that the state government takes loans as per approvals of the Ministry of Finance and in coordination with the Government of India, he said the loan money is strictly used for development projects such as roads, water supply, power, etc. The state government is in a very comfortable position to discharge its present and future loans, he added.
Sangma also said that out of the 19 state public sector enterprises (SPSEs), the largest and the most important are Meghalaya Energy Corporation Limited (MeECL) and its three subsidiaries. He admitted that there are challenges in the power sector which the government has been addressing for the last six years.
“Substantial progress has been made and the government has a roadmap for further improvement in the power sector in the next 4 years. While the losses of MeECL and its three subsidiaries were about Rs 520 crore in 2019-20, the losses for 2022-23 were Rs 358 crore. The balance sheet of the other SPSEs such as MIDC, MTDC, MGCC, FDCM, MMDC and MHHDCL are small. Even though they are non-profit making SPSEs, they are rendering useful services, and the government is taking steps to improve their performance,” he said.
He added, “The SPSEs under the Planning department such as MBMA, MAL and MIDFC are implementing EAP projects and are not expected to make profit. Accumulated losses of these SPSEs are marginal.”
On non-submission of utilization certificates (UCs), he clarified that the UCs are for grant-in-aid money of the state schemes given to the departments and state agencies.
“For instance, the grants-in-aid provided to the education department for salaries to schools. This non-submission of UC has no bearing on Government of India scheme releases. The Finance department is coordinating with all departments to improve the UC submission for the state schemes,” he added.