By Our Reporter
SHILLONG, March 10: Chief Minister Conrad K Sangma on Monday defended the state’s financial planning, and dismissed all claims by the Opposition parties about the state falling into a ‘debt trap’.
Replying to the budget discussion in the Assembly, he stressed that Meghalaya’s development is being powered by its own resources, not by excessive loans.
“Our state’s resources have consistently improved over the past few years, and we are committed to fiscal discipline and strategic economic planning,” Sangma said.
He said Meghalaya’s internal resources have grown at a compounded annual growth rate of 15% since FY19, while the state’s GSDP projected growth rate of 13.5% post-COVID will help the state in achieving the $10 billion economy goal.
Addressing concerns raised by some Assembly members, he rejected the notion that Meghalaya’s development is heavily reliant on loans. “Our growth story is being driven by our state’s resources, not just by loans,” he said.
He said that out of the total projected receipts of Rs 29,438 crore for FY26, only about Rs 3,800 crore would come from borrowings. The rest, he stressed, is derived from state resources and central schemes. “We are not funding our development on loans. Only 10% of our total revenue is attributed to borrowings,” he added.
The chief minister explained that the state’s rising share of central taxes is not a “favour” but a constitutional right as mandated by the Finance Commission. “That is our money, our share of central taxes. It is rightfully ours,” he said.
The budget revealed a significant increase in Meghalaya’s capital expenditure, which rose from Rs 1,259 crore in FY14 to a projected Rs 8,469 crore in FY26. The CM emphasised that this rise reflects the state’s focus on development initiatives, infrastructure growth, and job creation.
“Our growth in capital expenditure is much higher than revenue expenditure. Increased capital expenditure is vital for development works, economic growth, and employment generation,” he said.
Sangma addressed concerns about Meghalaya’s fiscal deficit, citing CAG reports that projected the fiscal deficit at 7.7% in FY21 and 6.0% in FY24. However, he clarified that these figures were influenced by factors like the Special Assistance to States on Capital Investment (SASCI), which is a 50-year, interest-free loan provided by the Centre.
“If you exclude SASCI from the equation, our fiscal deficit is 3.8% in FY24, not 6.0%. We are projecting a fiscal deficit of 3.5% in FY24 and 2.6% in FY25, which is well within acceptable limits,” he said.
He added that his government has requested the Centre to exclude SASCI loans from fiscal deficit calculations, citing their unique nature, and the Union ministry has agreed on it.
Explaining the SASCI loan mechanism, Sangma said: “This year, Meghalaya received Rs 2,450 crore under SASCI — the highest we’ve ever taken — based on our government’s efficiency and proper fund utilisation. In financial terms, this loan is not a typical burden. Under the concept of discounted cash flow, this 50-year loan, valued at Rs 2,450 crore today, will be worth only Rs 83 crore in present-day terms. There is no interest, and repayment will only begin in 2075.”
He further elaborated that Meghalaya has set up a consolidated sinking fund, contributing 0.5% of the total amount annually. “We will deposit Rs 12 crore every year in the consolidated fund, which will accrue interest over time. By 2075, when we must repay Rs 5,155 crore, the accumulated returns from this fund will effectively double our initial contribution, ensuring repayment without financial strain.”