‘Shares of central taxes are not a favour, but constitutional right’
Shillong, Mar 10: Denying allegations of heavy burden of loans on Meghalaya, chief minister Conrad Sangma on Monday asserted that the state’s “growth story” has been scripted by its own resources, and not by borrowings.
In his elaborate reply to the budget discussion in the state assembly, he sought to put to rest all “misconceptions” about the state’s “growth story” and laid down facts and figures to support his claim.
“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.
He termed “almost like free money” the 50-year loan under Special Assistance to States on Capital Investment (SASCI) and Externally-Aided Projects (EAPs).
Sangma also clarified that the shares of Central taxes is a Constitutional provision to devolve these taxes and give to the states, and not a “favour”.
“Direct tax is devolved and given to the states based on a formula and that is the share of central taxes but that is our money,” he asserted.
“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,” he said.
He said capital investments have gone up based on the increase in the state’s own resources.
Pointing out to the alleged concern as to who would pay back the loans taken by his government, Sangma said of the total Rs 29,438 crore, Rs 3,800 crore is loan component while the rest is Central schemes or the state’s own resources, including share of central taxes and own taxes.
“This clearly reflects that we are not funding our entire development on loan,” he said.
“Only a small amount – 10% of the total amount – which is very much within the permissible rate,” Sangma said while explaining that only up to 11-12 per cent is borrowed amount as approved by different agencies – Finance ministry and Reserve Bank of India (RBI).
The state’s own taxes, share of central taxes, Finance Commission grants, state’s own resources and other resources make up to around Rs 18,977 crore, which was spent on revenue expenditure and capital expenditure, he said, “This is clear that our development and our expenditure are not funded by loans. It is funded by our own tax resources.”
The share of central taxes amounts to Rs 10,910 crore.
Meanwhile, the state’s total borrowings in respect to total receipts stand at 12 per cent, far below the national average of 19 per cent, which is also the figure of neighbouring Assam.
“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,” he said.
On central resources versus total capital receipts, the chief minister said, “This shows the central resources against the central sponsored schemes (CSS) and other schemes… obviously the hill states and NE states are on the higher side … our share is 90:10 and other states get 50:50… since the funding is 90:10, the number is higher, which is a good thing – we get more money.”
To stress his point, Sangma said in Khasi, “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 of 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. Nobody will ask questions till 50 years from now and therefore if you calculate the net value of Rs 2,450 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 further claimed.
Regarding the EAPs, 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 adding “I am sure members would say we do it more. It is better than taking a market loan, it is better than going to the free market. We are not crossing the limit on the loan we are taking and we have got provisions to ensure that we are able to repay.”
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 has come out of our own state’s resources, not from loans,” he asserted.
