Economy looking up

There is good news. The economy of Assam, which had suffered the worst because of the lockdown induced by the Covid-19 pandemic, is beginning to look up, with the state government claiming that it is already back on track. Business activities which had suffered a double blow first because of the anti-CAA protests, and then because of the global crisis, have resumed for good. Manufacturing units across the state are now running in full steam, the tea industry has reportedly crossed a bad phase, commercial vehicles have returned to the roads, railways have resumed services significantly, and sale of cement, power and steel is said to have gone up. These are essentially indications of a reviving economy. The State government on its part has contributed to the improving economic situation by announcing various new schemes. One major indication of the revival of the economy is the visible increase in collection of Goods and Services Tax (GST).

According to official sources, GST collection in Assam has been Rs 1,020 crore during October. The same was Rs 912 crore during September. April is said to have been the worst month as far as GST collection is concerned; it was a paltry Rs 150 crore as against Rs 932 crore collected in April 2019. It is important to note that the state Finance department has expressed optimism that the collection of GST in the remaining months of this fiscal will also continue to rise steadily. A study of the state's revenue shows that the while it gets 34 per cent of its revenue from its own resources, the remaining 66 per cent comes from the Centre; of this again 35 per cent comes as share of Central taxes and the remaining 31 per cent as grants-in-aid. The State government also gets a significant sum as royalty on crude oil, but then failure of the State government to remain a major share-holder in the central sector PSUs operating in Assam has also had its negative impact on the economy.

Most importantly, Assam's own revenue collection of 34 per cent is not even enough to meet the expenditure of salary, wage and pension of the state government employees, which comes to about Rs 32,000 crore per annum. Poor perspective planning on the financial front, huge loopholes in the expenditure mechanism, rampant corruption, increasing number of government holidays, poor presence of the private sector in the manufacturing front, the annual scourge of floods, poor work culture, failure to bring about revolutionary changes in the agricultural sector, poor management and performance of the State PSUs, bandhs and blockades, forcible collection of donations – these are some of the reasons behind the poor state of Assam's economy.

Failure of the State government to convince successive governments in New Delhi to declare Assam's floods as a national disaster has also added to the state's economic woes; perennial damage to crops and public and private infrastructure has remained the biggest component of economic loss year after year. Over time, damage to public utilities has acquired the biggest share in flood-related losses. Additionally, the State government had to spend a huge amount for social security during the COVID-19 pandemic. Fortunately, the State government did accommodate some of the short-term measures suggested by the Economic Advisory Committee headed by former senior bureaucrat Subhash Chandra Das constituted in the wake of the pandemic and its impact on the economy.