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SHILLONG, Sept 3: With a robust 11.14 per cent compound annual growth rate (CAGR) from 2019-20 to 2023-24, Meghalaya is poised to reach its $10-billion economy target by 2027-28, aligning with strategic objectives, Commissioner & Secretary in-charge Finance Dr Vijay Kumar D said today.
He was reacting to the CAG report that Meghalaya’s $10 billion economy dream is dented by highlighting various fiscal parameters.
The CAG report had stated that Meghalaya’s GSDP growth in 2021-22 and 2022-23 lagged the national GDP growth rates of 18.36 per cent and 16.06 per cent respectively. The fiscal deficit increased from 5.71 per cent in 2021-22 to 6.55 per cent in 2022-23 which is above the target of 4 per cent set under the Meghalaya Budget Management & responsibility (Amendment) Act 2022. The outstanding Debt-GSDP ratio was 43.19 per cent in 2022-23, missing the Meghalaya FRBM Act target of 28 per cent.
Dr Kumar however said that India’s accounting system is complex and there are challenges because of the frequent revision of data by the Centre and the methodology adopted in the calculation of different fiscal parameters.
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He said that the department is coming up with a clarification in order to depict the reality on the fiscal parameters.
On the GSDP, the Commissioner & Secretary said that The AG’s report on GSDP numbers was finalised much prior to the release of the revised GSDP numbers by the Ministry of Statistics and Programme Implementation (MoSPI) in August 2024.
He said that GSDP (AG figures) was 38785 (in 2021-22) and 42697 (in 2022-23) and GSDP (MoSPI updated figures) was 40222 (in 2021-22) and 46551 (2022-23).
Stating that Meghalaya’s GSDP growth narrative undergoes a significant revision with updated MoSPI figures, the finance officer said integrating latest MoSPI data, Meghalaya’s economic growth exhibits a remarkable 17.4% CAGR (compound annual growth rate) from FY 2020-21 to FY 2022-23.
In regards to the Special Capital Assistance consideration, the commissioner & secretary said that post COVID Government of India launched a ‘Special Capital Assistance to States for Capital Investment’ (SASCI/CAPEX) for capital expenditure projects, which provides 50-year interest free loan to states.
It is linked to quality of expenditure and performance of the state in utilizing CAPEX which the state of Meghalaya has been effectively utilising.
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“Consequently, the release from the Centre has increased from Rs 200 crore in 2020-21, Rs 281 crore in 2021-22 to Rs 1,049 crore in 2022-23 and Rs 1,293 crore in 2023-24. Moreover, in 2024-25 the State is expected to receive Rs 2,085 crore. Since this loan is provided for 50-year interest free it is more like a grant to the states, though being kept as part of fiscal calculations of the state by AG and GOI,” he said while adding, “Hence, to get real status of fiscal deficit of the state and outstanding debt the same is to be excluded from the calculation of the fiscal deficit and Debt-GSDP.”
As far as the Fiscal Deficit (FD) is concerned, Dr Kumar said that the fiscal deficit indicates the excess of expenditure over receipts. The Government of India tightly controls the level of deficit that the states can incur. The permissible limit for the year 2022-23 is 4% of the GSDP.
He pointed out that Fiscal Deficit (FD) as a % of GSDP by AG was 6.14 (in 2018-19) and 6.55 (2022-23) FD after Correction 1 (Revised GSDP by MoSPI) was 6.30 (in 2018-19) and 6.01 (2022-23) FD after Correction 2 (Revised GSDP and excluding CAPEX) was 6.30 (in 2018-19) and 3.75 (2022-23).
“Therefore, the Fiscal deficit for the state after making both corrections is 3.75 per cent in 2022-23 which is well under the limit set by the Government of India,” he added.
Further, the commissioner & secretary said that Meghalaya government has always borrowed under the limits set by the government of India.
“Debt is a public finance instrument to boost growth which is used by all the countries to finance their infrastructure projects. The net borrowing limit of the states is determined by the Government of India and the state of Meghalaya has always borrowed under the limits set by GoI. These borrowed funds are used effectively to invest in critical infrastructure,” he said.
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“The Capital Expenditure for the state of Meghalaya has almost doubled from Rs 1,903 crore in 2018-19 to Rs 3,362 crore in 2022-23. This indicates that debt has been effectively utilized and should be seen as a strategic investment in Meghalaya’s future, not a challenge or burden,” Dr Kumar added.
He said that the Outstanding Debt (OD) as a % of GSDP as per AG was 32.22 (in 2018-19) and 43.19 (2022-23). OD after Correction 1 (Revised GSDP by MoSPI) was 33.02 (in 2018-19) and 39.62 (in 2022-23). OD after Correction 2 (Revised GSDP and excluding CAPEX) was 33.02 (2018-19) and 36.33 (in 2022-23)
“After making both the corrections, the Debt-GSDP figures are much lower at 36.3%. These figures show a marginal increase as the borrowing limit was increased during COVID by GoI,” he stated.
“The Finance department has developed a mechanism to put the state finances on a sustainable debt path ensuring that the debt levels are within the prescribed limit to meet the twin objective of achieving the $10 Billion Dollar economy and maintaining fiscal prudence,” Dr Kumar added further.
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