Empty coffers

To be economically viable, Assam should be producing more and throwing up new avenues for revenue generation. But it isn’t. The upshot is near empty coffers and a dangerous dependence on Central funds. The new BJP-alliance government is lamenting it has inherited ‘committed liabilities’ of over Rs 10,000 crore from the previous Congress government. This does not include the dues outstanding to banks and fincial institutions, so the burden is much larger. Of this inherited liability, over half is for pay revision burden (Rs 4,800 crore) and employee’s regular dearness allowance (Rs 900 crore). That the State government failed to pay up even its 10 percent share of Central welfare schemes, with the dues now totaling Rs 380 crore, indicates how the State lost out on development due to fiscal mismagement. Governor PB Acharya in his customary address to the new assembly emphatically raised the point that revenue collection has not kept pace with the fast rising salary, pension and non-plan expenditure bills, which in turn has left ‘virtually no monies available for the state plan’. If we ignore the political posturing accompanying the tabling of the White Paper on Assam’s finces in the assembly on Friday, there are several aspects that are highly worrisome. The first is interl revenue generation, which has been plunging steeply in the last five years. Revenue growth at a mere 1.39 percent rate (in 2014-15) is inexcusable; it was little better the next year at 3.39 percent. What was the State government doing? After all, the days of Planning Commission largesse were ending, with Prime Minister rendra Modi having made clear his intention to wind it up in his first Independence Day address. It is clear that the State government’s attempts to identify ‘areas of possibilities’ to raise resources, while cutting down wasteful expenditure, ratiolizing fund transfers and plug leakages failed to get off the ground. Fince minister Himanta Biswa Sarma has now rubbed it in by ascribing this failure to lacue in the system, slackness of revenue earning departments and rampant corruption. With little scope to increase revenue through additiol taxes, Sarma says the only way forward is to make revenue mop up ‘more efficient’. That he is still targeting a revenue growth of 15 percent in the current fiscal indicates some long overdue policy tightening and loophole plugging measures in the next budget. In an action-plan outlined in the White Paper, the proposal to institute IT-ebled systems ‘with near-zero human interface’ in public fince magement is interesting. If implemented sincerely, this one measure will go a long way in reducing official graft. As for states getting higher share of Central taxes (raised to 42 percent by the 14th Fince Commission last year), the Assam government will still struggle to mobilize funds for schemes. Continuation of special status and thereby greater Central funding for the State will be vital if it is regain fiscal health. Chief Minister Sarbanda Sonowal has been harping on this issue, and is likely to get a sympathetic hearing from the BJP-led government at the Centre. If it causes some heartburn in the Congress now, well, that is how realpolitik operates.