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ON THE EDGE

BY JOYDEEP BISWAS
BY JOYDEEP BISWAS

CLOSE on the heels of BJP-led alliance’s poll victory in Assam, finance minister Himanta Biswa Sarma, tabled a ‘White Paper on Assam State Finances’ in the state Assembly on June 03.

The 21-page document, updated to May 24, the day the first-ever BJP government in Assam assumed office, is touted as ‘an honest attempt to find out the reality of the state finances and accept the same in order to devise an innovative and prudent strategy to strengthen the institutional mechanism to yield positive results in sustained manner over a period of time.’

Pointing at the preceding Congress government for the ‘dismal financial situation of the state,’ Sarma, dubbed as the architect behind the drubbing inflicted on his former party, said that the new government’s intention was not to ‘blame anyone but just to inform the citizens about the actual reality of the public finances as the new government assumes office.’

Interestingly, Tarun Gogoi, the dethroned Congress Chief Minister, had also released a White Paper in Assam’s run up to the Assembly elections. Gogoi’s white initiative, released before the media on 13 February this year, was clearly meant for serving two purposes.

One, he wanted to prove how the Congress government under his stewardship for 15 years had improved on the state’s finances. Two, he tried to put the blame on the NDA regime in New Delhi for the sluggish development initiative of his government in the past two years by ‘depriving’ Assam by squeezing Central assistance.

Needless to say, Gogoi’s White Paper was more a political document than a technical one. The strong political overtone contained in the sheaf of fiscal papers was purported to be used for reaping electoral dividends in the poll bound state.

In the centrist federal polity of the country, aspersions from the provincial governments against the Union for financial deprivations are not uncommon. That ‘India, that is Bharat, shall be a Union of states’ ~ as the Article 1 of the Constitution puts it ~ and not ideally a ‘federation of states’ manifests itself most in the matters of devolution of Central taxes and allocation of planned resources to the states.

The entire Constitutional arrangements around the formation of and awards from the quinquennial finance commissions and also the statutory establishment of the Planning Commission, since sought to be replaced by the NITI Aayog, are undoubtedly skewed towards the Centre.

As a result, if a particular state and the Union are ruled by two different political parties, more specifically if they are pitted against each other in state politics, such instances of the state taking the Centre to task for depriving financially are very commonplace.

Viewed from this vantage point, Gogoi’s spat with the Centre during his last days in power on the issue of faltered flow of funds from Delhi to Dispur should not raise any eyebrow. But the development, post-installation of the BJP government in Assam, is slightly surprising, if not intriguing.

Chief Minister Sarbananda Sonowal, currently on his first trip to the national capital after assuming office, met the Prime Minister on Saturday and pleaded for release of Rs 2,6226 crore so that his government could tide over a ‘precarious financial condition.’

He is reported to have insisted on the release of the amount to meet the committed liabilities and take up several developmental projects as promised to the people during the elections.

In the course of his meeting with PM Modi, he is understood to have referred to a financial obligation to the tune of Rs 10,000 crore his government has inherited from the predecessor, a fact very carefully articulated in the Himanta Biswa Sharma White Paper.

While the new government in Janata Bhavan will do well if they succeed in wresting additional fund from Arun Jaitley to bridge the huge development deficit Assam has sustained over the decades, the story around the passing of Rs 10,000 crore as ‘liabilities’ by the earlier regime needs a closer scrutiny.

On page 18 under section 4.13 of the White Paper, a detailed decomposition of the ‘committed liabilities’ is given in tabular form. A total of six items against which the corresponding liability amounts have been calculated are available in the section. Even as questions may be raised about all the six entries as to whether they strictly qualify to be treated as ‘liability’ of the present government, we would, for the present, point out only two of them.

Item No (c) provides for Rs 900 crore against dearness allowance (DA) for employees with effect from 01 January this year.

The Congress government in Assam was very punctual in releasing DA to the employees since the recommendations of the Sixth State Pay Panel were implemented in 2009. In fact, Assam government can take the credit of being among a handful of state governments in the country who have been able to maintain the DA rates at par with that of the Central government.

As if not to be outdone, the Sarbananda Sanowal government also, in its very first Cabinet meeting, resolved to release 06 percent DA with effect from 01 January, a decision Tarun Gogoi had to put on hold due to the election model code of conduct. Now the moot question is ~ can this expenditure to be incurred for the payment of DA to be considered a ‘liability’ handed down by the previous regime?

The issue of ‘liability’ would certainly have surfaced had the earlier government defaulted in paying the DA up to 31 December 2015. But that has not been the case.

The other contentious entry is (d) in that section, by far the largest amount ~ Rs 4,800 crore. And the source is ‘implication of pay revision in 2016-17.’ This item indeed beggars all explanations. 

First question is, even as the Seventh State Pay Panel is yet to come up with any set of recommendations, how could the finance department officials arrive at this figure?

Secondly, even if the present government has applied its judicious guess to construct this figure, which is at least theoretically possible, by any stretch of implication, can this amount be considered a handiwork of the past government?

If we now take out these two entries ~ which between them add up to Rs 5,700 crore ~ the total ‘committed liability’ of the Sanowal government boils down to slightly over Rs 4,000 crore. And surely, Sarbananda-Himanta cannot try for a tactful political mileage that is expected to help them impress the North Block.

What is more interesting is the language of the memorandum Sanowal submitted to PM Modi yesterday. Almost taking a cue from Gogoi’s text, Sarbananda has alleged that the 14th Finance Commission’s award to Assam did not reflect its assessment of the ‘cost disability or fiscal capacity’ of the state.

It reads: ‘(That) Assam has been deprived to a great extent has been evident from the fact that while the state was awarded a revenue deficit grant of only Rs 3,379 crore during 2015-20, smaller states like Nagaland, Mizoram, Manipur, Himachal Pradesh, and Jammu and Kashmir were rewarded handsomely by 14th FC.’

On a positive note, this submission from a BJP-led state government to the BJP-led Central government is not only unprecedented, but very bold and encouraging as well. But from a critical angle, the tone and tenor of the memorandum will only make Tarun Gogoi smile in this otherwise hour of gloom for the Assam Congress!

(Joydeep Biswas is an associate professor of economics at Cachar College, Silchar, Assam. To see all his previous articles, click here.)

DISCLAIMER: The opinions expressed within this article are the personal opinions of the author. The facts and opinions appearing in this article do not necessarily reflect the views of NEWSMEN and NEWSMEN does not assume responsibility or liability for the same.

 

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