From CK Nayak
NEW DELHI, Oct 7: Several welfare measures of the Meghalaya government have constantly exceeded its fiscal capacity, experts said quoting from the recent CAG report.
This has resulted in “fiscal fragility” coexisting with the ever-expanding welfare state, the report said.
“Whether expansive like Maharashtra or compact like Meghalaya, states face a common dilemma: Their welfare ambitions consistently outstrip their fiscal means. Borrowing patterns may diverge across size and scale, but the underlying paradox is the same: Fiscal fragility coexists with an ever-expanding welfare state,” it said.
On paper, many states, including Meghalaya, show balanced or even surplus positions. In practice, they lean heavily on central transfers, off-budget loans, and deferred liabilities, said the report, prepared by three Jindal University experts who are also associated with the London School of Economics and other institutes of repute.
The CAG report on the finances of Meghalaya for 2023 had shown that the state’s revenue receipts expanded by 3.82%, reaching ₹14,819.87 crore, but this was below the budgeted estimate. An increase in tax revenue was offset by a decrease in non-tax revenue and grants-in-aid from the central government, according to other reports.
The state’s borrowings and other liabilities were 136.36% higher than the budgeted estimate for 2022–23, leading to an overall increase in total receipts compared to the previous year. The state’s revenue expenditure was ₹14,863.77 crore but this included a significant portion (6.92%) spent on interest payments for public debts.
The CAG report has found that whenever fiscal revenues fall short, Indian states tend to bridge the deficit gap with enhanced loans and utilised bonds, steadily adding to their public debt. This pattern has intensified in recent years, particularly during the COVID- 19 pandemic, when collapsing revenues and emergency spending forced almost every state into record borrowing.
The data compiled by the CAG in its State Finances 2022–23 confirm this divergence, showing that borrowing trends between 2016–17 and 2022–23 shifted in markedly different directions across states. Small states remain dependent on transfers, while big states rely more on their own resources and borrowing.
The fiscal realities of the small states (Arunachal Pradesh, Assam, Goa, Himachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, and Uttarakhand) are shaped as much by geography as by size. Mountainous terrain, dispersed settlements and narrow economic bases raise delivery costs and limit revenue mobilisation in most small states, the report added.
Most Northeastern states remain below 20%, confirming reliance on Union transfers. Their fiscal base may be modest, but their responsibilities are no lighter, making choices especially sensitive to geography and capacity, the report said.
With narrow tax bases and high delivery costs, modest increases in borrowing can push the debt-to-GSDP ratios of smaller states to levels that would be unremarkable in larger states but alarming for former. Manipur and Meghalaya, though smaller in rupee terms, also expanded to ₹11,116 crore and ₹6,221 crore by 2022–23, respectively, the report said.
India has built one of the world’s most expansive welfare systems, but it rests on one of the most fragile fiscal foundations. The outcome is a state of extraordinary reach but constrained capacity, a spectacle of care balanced precariously on the edge of scarcity.
