SHILLONG, MAR 10: Chief Minister Conrad K Sangma on Monday said that the growth story of Meghalaya has been powered by the state’s own resources and not by borrowings.
Sangma while replying to the discussion on budget said, “This entire misconception that our growth story is being driven by loans and that it is the people of the state that will have to pay back the loans, is completely wrong.”
The chief minister said the shares of central taxes is a constitutional provision and mandated by the constitution for the central government to devolve these taxes and give it to Meghalaya and to other states.
“Therefore, to say that this (share of central taxes) is central government’s money is going against the entire spirit of the constitution where this direct tax is devolved and given to the states based on a formula that has come up by the Finance Commission and that is the share of central taxes but that is our money. It is not that the centre is doing a favour by giving this money to us. It is rightfully ours. So, technically that is what our state resources are.”
According to him, the amount of capital investments has gone up in the expenditures based on the increase in the state’s own resources.
Sangma said, “To give a rest to the continuous issue that people have that why are we taking so much loans and whose going to pay back these loans (is that) out of Rs 29,438 crore, Rs 3800 crore is the loan factor, the rest is all our central schemes or the state’s own resources which include the share of central taxes and our own taxes.”
“This clearly reflects that we are not funding our entire development on loan. In fact only a small amount, it is 10% of the total amount which is very much within the permissible rate. These are actual figures; I am not making this up,” he said. He said, “This is what is very important for everybody to remember that less than about 11 to 12 percent is from the borrowed amount which is again as per the norms that have been laid by the different agencies including Government of India’s finance department and reserve bank of India (RBI).”
The CM said, “This makes up the total amount of close to Rs 18977 crore of the funds that are spent by us on revenue expenditure and on capital expenditure. So it is clear that our development and our expenditure is not funded by loans. It is funded by our own tax resources, a share of central taxes. Rs 10,910 crore is the share of central taxes, which is our money, which is constitutionally due to us based on constitutional provisions and based on devolution made by the finance commission.”
Sangma said, “The national average is 19 percent and states like Assam and other states it is at 19 percent of the total borrowings over the receipts and we are well below that number at 12 percent. This is an example to you that we are not dependent on borrowing; our receipts are made up of our own state’s resources maximum.”
On central resources versus total capital receipts, the chief minister said, “Again this shows the central resources against the central sponsored schemes (CSS) and other schemes and how much of that compared to the total receipts that are there and obviously the hill states and NE states are on the higher side because our share is 90:10 and other states get 50:50, therefore, since the funding is 90:10, the numbers are higher which is a good thing we get more money.”
The chief minister also stated in Khasi language that “SASCI bad EAP (long) kum pisa ba ioh ei” – meaning that the SASCI and EAPs are almost like free money.
“I am not saying it’s free but it is almost like free money because it is not the kind of a loan rate that we are saying,” he said.
Informing that Meghalaya will be taking interest free loan at Rs 2450 crore under SASCI, Sangma said, “This is the highest that we have ever taken and it is based on the efficiency of every state government and based on the utilization that you do that government of India further sanctions.”
“This is not a real loan, it is not like a market loan which requires me to pay interest and pay back the loan in 5 or 10 years time. Nobody will ask questions till 50 years from now and therefore if you calculated the net value of Rs 2450 crore it is Rs 83 crore as of today. That is the beauty of this scheme,” he said.
“There is also a provision of consolidating sinking funds (CSF). For this particular loan, we have to put Rs 12 crore in the CSF every year for the next 50 years and that will give us interest. And that is going to be Rs 5155 crore in 2075 which means when we have to repay Rs 2450 crore, we will have actually Rs 5155 crore double of what we have to pay because of the fact that interest is not applicable,” the CM claimed.
Sangma said that EAPs in 7 years is Rs 7427 crore and effective EAPs to be repaid is Rs 742 crore.
“Out of Rs 100 crore we take (under EAPs) , the government of Meghalaya has to pay 20 percent of it and 72 percent is repaid back by government of India so there is no question of us taking any loan,” he stated
The CM further assured that his government will ensure Meghalaya will not fall into a debt trap.
“Rest assured the people of the state and the House should be aware that we are taking all provisions to ensure that Meghalaya will not fall into a debt trap. We will not put any risk to our future generation. It is our responsibility that we will take care of the finances and that is why our maximum amount of expenditures we have done has come out of our own state’s resources not from loans,” he said.