Information tabled in the Lok Sabha by Union Minister of State for Finance Pankaj Chaudhary paints a grim picture of Goa's finances raising concerns over the sustainability of the State's fiscal strategy. Data shows that from a figure of Rs 4,417 crore in 2005, Goa’s debt ballooned to a staggering Rs 31,758 crore in 2023, and further to Rs 34,758 crore by the end of financial year 2023-24. This trajectory reflects a deeper concern about the reliance on borrowing to fund essential services and growth initiatives without a coherent plan for debt management and repayment.
The Union Minister of State for Finance mentions in his reply that Goa’s debt now constitutes approximately 38.3 per cent of its gross domestic product (GDP). This information serves as a wake-up call to the government and the citizenry and means that the State has overstepped its fiscal boundaries. The breach of the 25 per cent threshold for outstanding debt relative to the Gross State Domestic Product (GSDP), as per the guidelines set by the Goa Fiscal Responsibility and Budget Management (GFRBM) Act, calls for a reassessment of fiscal policies.
The increase in revenue surplus from Rs 59 crore in 2021-22 to Rs 2,400 crore in 2022-23 is a positive and indicates improvements in generating funds, however, this does not negate the undercurrents of fiscal instability. The continuous shift to borrowing — nearly 30 per cent of the full-year target already achieved through bonds this financial year — begs the question: Is Goa’s growth pace genuinely sustainable?
In an era where social welfare schemes are vital for improving quality of life and infrastructure development is crucial for economic growth, the temptation to borrow is understandable. However, using debt to overcome financial hurdles can have massive consequences in the long run. The focus has to be on strategic fiscal planning where the priority is on generating revenue that will cut down debt. The Comptroller and Auditor General (CAG) report from time to time has been advocating that fiscal discipline should take precedence.
While the haze over mining is still not clear, the tourism sector remains the backbone for revenue generation, and that has to be harnessed strategically. If the State fails to strike a fair balance between earnings and spending, it could find itself in a situation of no return. The challenge lies not in financing welfare and growth initiatives, but in doing them sustainably. Sadly, the State is now looking at a cycle of unending debt that could choke public welfare and development in the future.
The State is likely to seek a higher share in the central taxes to fill in the infrastructure gaps and prioritise local development during the 16th Finance Commission visit to Goa next month. Goa is expected to put up a case to allow a minimum of 1 per cent of all taxes to the State, irrespective of its size and population. At present, as per the 15th Finance Commission (2021-26), the State share from central taxes is hardly 0.386 per cent. Maybe, the Goa government has an advantage here because of the double-engine sarkar, but that is not a permanent fix for the issue at hand. The burgeoning debt will still remain a matter of concern.
While the State sticks to its growth narrative, it must remain vigilant against the spectre of unsustainable debt. Responsible fiscal governance should be the watchword, ensuring that borrowing leads to productive outcomes. It's a challenge that the government must undertake while navigating the turbulent economic turf.
