Way to Fiscal Discipline

The Centre has done Assam a great service by directing the State government to submit utilization certificates for grants received from the Centre earlier before fresh release of funds can be made. Assam’s Agriculture Minister Atul Bora called on Union Agriculture Minister Radha Mohan Singh on Wednesday and raised a number of issues including the vital matter of the Centre’s failure to release funds to the State. According to Bora, “The Union Agriculture Minister was very accommodative and requested us to sort out the issue of UCs (utilization certificates) first before the Centre could release the funds.” The State Agriculture Minister, who submitted two memorandums to the Centre, made an appeal for expeditious release of Central funds. He regretted that the release of Central funds had been withheld due to the failure of the previous government to submit utilization certificates. Bora also informed the Union Minister about the agricultural crisis created in Assam by attacks of paddy fields by insects in as many as 22 districts of the State. He also informed the Centre that the situation is being brought under control in those districts which had been hit by the caterpillar mece earlier. He added that necessary steps had been taken to tackle the mece and insecticides had been supplied also to the newly affected districts.

There are two issues that concern us in a situation like this. One is the total flouting of all fiscal discipline during the 15 year-rule of the Tarun Gogoi government. The other is the duty of the Union government to the States in the case of emergency situations where urgent life-saving measures are called for. There is no doubt whatsoever that the Tarun Gogoi government gave the Centre very legitimate reasons to demand the submission of utilization certificates and proper accounts before being expected to release further Central funds. Assam had never seen the kind of fiscal indiscipline within the government as it did during the 15-year-rule of Tarun Gogoi. All customary rules and norms of handling of public money were flouted, and the Fince Minister (Tarun Gogoi) gave the clear indication that there would be no bar to government officers using public money as they pleased. Not surprisingly, there was downright loot of public money in almost all the State government departments. A substantial amount of this loot was going into the coffers of politicians and others who were quite incapable of earning an honest living either with their hands or their brains. What was worse was that many of them set up cartels and syndicates in order to facilitate the task of looting Central government funds. Over the years, the Tarun Gogoi  government was uble to furnish UCs and proper statements of accounts for Central grants exceeding Rs 12,000 crore. This is a totally ucceptable kind of situation for any government. Tarun Gogoi was able to get away with such fiscal indiscipline only because there was the Congress-led UPA government at the Centre. It will not cut much ice for the present State government to plead that all the fiscal indiscipline leading to the failure to submit UCs was something that the previous Congress government had done. After all, governments in the different States or at the Centre must be seen as a continuum, regardless of the fact that different political parties come to power from time to time. In India, the situation is made much more difficult than it need be largely because political parties are far more concerned about the future of the party rather than about governce. There have been umpteen instances all over India of a political party in power cleaning out the exchequer when it realizes that some other party is about to replace it at the forthcoming elections. This makes it imperative for the Centre to insist on State governments furnishing UCs of previous grants even though the party in power might have changed. The fiscal discipline of insisting on the timely submission of UCs must be rigidly enforced in Assam if the harm done to the fiscal discipline of the State is to be even partially remedied. The State has to be thinking of its distant future and an acceptable and durable fiscal culture and not just the next few years. It should also pay far greater attention to the garnering and deployment of its tax revenue. We have reasons to believe that Assam’s tax revenue today ought to be about 10,000 times what it was in 1971. This is because our estimate of the value of goods coming in from other States of India to Assam today is about 10,000 times what it was in 1971. That being the case, the sales tax revenue ought to be about 10,000 times what it was in 1971. Even if our estimate of the value of goods coming in might be a trifle over ambitious, this value could not be anything less than 5,000 times what it was in 1971. The sales tax revenue today ought to be at least 5,000 times what it was in 1971. Assam’s sales tax revenue is nowhere near this. The obvious leakages in the State’s sales tax revenue ought to be a matter of very serious concern for the government. Unfortutely, there is no indication that anyone in government is at all concerned about the massive leakage of sales tax revenue that has been taking place for decades.

What we cannot afford to lose sight of is that the Centre also has its responsibilities to the people of the different States in times of crisis and tural calamities. These are occasions when the Centre cannot afford to withhold grants to the States solely because politicians and bureaucrats have failed to furnish UCs in time. At a time when unprecedented floods and the spread of the caterpillar mece have wrought havoc, the Centre obviously has a responsibility to the people despite the failure of officials to furnish UCs for earlier grants paid to the State. There has to be some room for humanitarian considerations and compassion as well.