The Hindu Business Line : ‘Gujarat highly indebted; ignores poor and farmers’

Ahmedabad, Dec 14 Challenging the claims of the Gujarat Government about ushering in a high economic growth rate, Finance Minister P. Chidambaram today said, in fact, the State has earned the dubious distinction of being among the six states “classified as highly-indebted”, the five others being Maharashtra, West Bengal, Kerala, Punjab and Rajasthan.

Heavy borrowing

Financial management of the Gujarat Government is “not good" and its debt burden has more than doubled between 2001-02 and 2006-07, from Rs 45,301 crore to Rs 94,009 crore. Gujarat is financing its plan and non-plan expenditure through heavy borrowings. “You can’t borrow beyond your capacity to repay. If you borrow today, your next generations would have to repay,” he said while addressing a press conference called by the Congress Party on the last day of campaigning for the second and last phase of the ongoing Assembly polls, for which polling is due on Sunday (December 16).

He described the Narendra Modi administration in Gujarat as one of the “worst fiscally-managed” governments in the country having run up such huge debts which the next two generations would have to pay.

Centre’s bounty

Rubbishing Mr Modi’s allegations of the centre discriminating against Gujarat on political grounds, Mr Chidambaram claimed that in the last four years since the UPA government came to power in New Delhi, the Centre had given the state Rs 14,000 crores as its share in central taxes apart from another Rs 10,000 crores for various plan and non-plan expenditures. This was “the highest amount paid to the State by the Centre” for any four-year block since Independence.

However, when asked about Mr Modi’s argument that the Centre was paying much less to the State compared withthe taxes it collected from Gujarat, Mr Chidambaram said there was no way to measure which State contributed how much to the Central kitty by way of various taxes.

The Minister said, the Centre had also helped Gujarat with various fundings, including loans from the Asian Development Bank and the World Bank and the water supply projects being implemented by the Netherlands Government and others .

Poor ignored

But despite all possible central assistance, the Modi Government had been managing its fiscal affairs so badly that Gujarat had witnessed doubling of its accumulated debt burden.

He said not only was Gujarat’s fiscal management bad, its style of running the economy was “alarming”. It was spending a mere 31 per cent of the budgetary allocations for the social sector, totally ignoring the needs of the poor, marginal farmers and other weaker sections of the society.

Denouncing claims of development in Gujarat, he said, its model of development only hurt the downtrodden and, in the long run, would only damage the State’s interests.”Even smaller states like Chhattisgarh, Jharkhand and Uttaranchal spend more on the social welfare sector than Gujarat.

Pointing out that the state’s 23.5 per cent of the budgetary allocations was spent only on payment of interest on debts which was 285 per cent of its total revenue receipts, Mr Chidambaram said no Government could run its administration by only borrowing beyond its capacity. No attempt was made by the state government to improve its tax collection, better fiscal management and cut on the wasteful expenditure. The state was also falling far behind in implementing the centre’s pro-poor programs and was demonstrating total neglect of the poor and downtrodden.

In contrast, Mr Chidambaram claimed, that the UPA government had, in the last four years, brought down the inflation level to the lowest ever three per cent of the GDP. Admitting that the prices of foodgrains and food products were still running high, he said it was a part of "global phenomenon".

Asked about the investments made in Gujarat, he said, except for the petroleum and petrochemicals sectors where this State had an advantage, “no significant investments” were made. Some investments were attracted in Kutch district but it was because the Centre declared tax holiday for the district after the 2001 earthquake.

He admitted that Gujarat’s annual plan allocations had steadily been rising during the last few years but denied any credit to the State Government for it. It was due to the Centre’s policies that all the States could meet their plan expenditures in full. He claimed that never in the history of the country, the Centre had given so much of funds to the states that all the states together had now accumulated cash balance of over Rs 74,000 crore.

The Minister also said there was no inclusive growth in Gujarat as the well-being and financial condition of the poor and weaker sections had been hurt badly.

He said Gujarat was lagging behind other states in the implementation of the Pradhan Mantri Gramin Sadak Yojana (Prime Minister’s Rural Roads Construction Scheme) and stood at the 17th position in terms of expenditure on social welfare sector.

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