Bad home economics principles may have turned out to be the cornerstone of political economics in Goa.
Despite the burdened state treasury groaning under a debt of nearly Rs 20,000 crore, political parties announced a slew of populist schemes offering doles, low interest loans without collateral and allowances for women and youth, in order to gain maximum traction among the electorate in the state assembly polls which were held on February 14.
According to the state finance ministry officials the state’s current debt is pegged at around Rs 20,054 crore, with a bulk accounted for by market loans of Rs 16,364 crore taken by the state government.
The other major debt component are loans sourced by the government from the National Bank for Agriculture and Rural Development (NABARD) to the tune of Rs 593.48 crore.
The central government’s share of loans to Goa includes Rs 1,894 crore in the form of special securities issued to the National Small Savings Fund and loans and advances from the central government which are valued at Rs 1,172 crore.
Goa’s total debt is a shade less than the total net budgetary expenditure of Rs 21,646 crore earmarked for the financial year 2021-22 and nearly 22 percent of the estimated gross domestic product of the state which has been pegged at Rs 89,421 crore.
While the Goa government has acknowledged the seriousness of the debt burden on the state exchequer, the outgoing regime led by Chief Minister Pramod Sawant, according to an official statement issued here, has made efforts to restructure the loans which have been regularly taken by the last several governments to carry out major infrastructural work as well as meet other expenses.
“In order to maintain fiscal discipline, the government has targeted various loans which were taken earlier at high interest rates. Some loans, for example of GWMC (Goa Waste Management Corporation) amounting to Rs 72 crores, were at high interest rates, as high as 13 percent. This required to be revisited,” the state government has said in a formal statement, underlining the importance of financial prudence.
“The government negotiated with various agencies from whom the amount had been availed and has successfully got the interest rates reduced to around 8 percent. Further, some loans which were at high interest rates have either been refinanced with lower interest loans or prepaid with the surplus amount of the Government, so as to effectively save the outflow from the exchequer on these loans. Total loans worth more than Rs 500 crores were restructured using the above methods,” the statement said.
Despite the debt burden and efforts made by the state government to address the burgeoning rate of interest accrued from the outstanding loans, nearly all political parties announced populist bonanzas ahead of the recently conducted assembly polls.
While newbie AAP promised free electricity, unemployment doles to voters, the Trinamool Congress followed suit with unemployment doles as well as financial doles for women and low interest loans for the youth. The BJP has already announced free water supply as well as three free gas cylinders annually, the Congress has promised Rs 6,000 to economically backward families.
The freebie oneupmanship also triggered a battle between former Union Finance Minister P. Chidambaram and TMC’s Mahua Moitra, an investment banker who has worked for JP Morgan Chase, over the TMC’s announcement of a Rs 5,000 dole for every woman head of the household in Goa.
Chidambaram claimed that the dole would take a toll of Rs 2,100 crore on the state’s finances annually while Moitra claimed that the dole was doable, because it accounted for only six to eight percent of the annual budget and will help inject liquidity into the economy.
Chidambaram himself claims that tapping funds was not the issue confronting debt-ridden Goa, adding that the catch lay in the allocation of funds.
“The source of funds was never a problem, but the problem was with the allocation of funds,” Chidambaram said.