Meghalaya Chief Minister and Finance In-Charge, Conrad Sangma, on Wednesday reaffirmed the state’s ambitious goal of becoming a $10 billion economy, emphasizing that this target is both realistic and achievable. During his address, Sangma also shed light on recent discussions with the Union Finance Ministry regarding concerns raised by the Comptroller and Auditor General (CAG) in their latest report on the state’s fiscal management.
Sangma clarified that the CAG report had categorized funds provided under the “Special Capital Assistance to States for Capital Investment” as part of the state’s debt. While acknowledging the CAG’s adherence to its instructions, he argued that this classification should not technically be included in the state’s debt or fiscal deficit calculations.
“The AG (Accountant General) is not wrong in their assessment; it’s just that this figure shouldn’t be included in our debt or fiscal deficit calculations. However, the AG was instructed to classify it this way. We’ve raised this issue with the Government of India. In fact, just yesterday, a meeting was held with the Finance Department, and the Ministry of Finance has taken note of this. They have requested us to submit a formal letter, which will then be addressed with the AG to ensure that in the future, such figures do not impact our fiscal deficit or debt capital,” Sangma explained.
Sangma mentioned that Finance Commission Secretary Vijay Kumar had engaged in detailed discussions at the Finance Department, particularly concerning the Special Assistance to States for Capital Expenditure scheme. The Ministry of Finance, recognizing the validity of the state’s concerns, has asked the Meghalaya Government to formally communicate the issue. This will be taken up with the AG to ensure correct classification in the future. Sangma reassured that the principal amount of this assistance would be repayable after 50 years, without any interest.
“Our fiscal deficit is 3.75 percent, but the CAG has been directed to include this special capital investment under our debt, which has been done for all states. The Finance Department will now instruct the CAG that from next year onwards, there should be a clear distinction: one column showing the fiscal deficit with the capital investment, which might reflect 6.0 percent, and another showing the actual fiscal deficit at 3.75 percent. This way, everyone will understand that these are two different categories that should be dealt with separately. Those interested in seeing the figure with the special assistance can refer to one column, while those focusing on the actual deficit can refer to the other,” Sangma detailed.
He added, “From all perspectives, this long-term, interest-free loan, repayable after 50 years, is almost equivalent to a grant. The state government has mechanisms in place, such as the consolidated sinking fund, which will accumulate interest over time, ensuring we have sufficient resources to repay the principal amount when it becomes due.”
The state government has already sent a formal letter to the AG, explaining the situation. Addressing further questions, the Chief Minister clarified that the Utilisation Certificate (UC) in question had not yet been submitted to the Government of Meghalaya, emphasizing that this was an internal matter. He stressed that this issue did not pertain to the central government, as the state had already submitted the final cumulative UC to the Centre.
During a presentation, the state government addressed concerns regarding its debt, asserting that debt in itself is not inherently problematic. Sangma pointed out that Meghalaya’s current borrowing stands at 3.75 percent, comfortably below the permissible limit of 4 percent. In financial terms, the state carries a debt of ₹20,000 crore, but the Chief Minister assured that Meghalaya is well within its capacity to manage and repay these loans. He further clarified that out of the ₹27,000 crore budget, only ₹3,000 crore is attributed to borrowing.