By Sumarbin Umdor
A young Chief Minister has taken over the reins of government in Meghalaya, and in the first few days of office he has spoken about the need to commit to fiscal prudence and discipline in managing the affairs of the state – statements which indicate the mindfulness of the new head of government about the precarious financial condition of the state and the necessity for judicious utilization of financial resources for the common good. While there is no doubt on the good intentions of the Chief Minister, the test of resolve to change the deep rooted culture of government’s profligacy and corruption will be evident in the actions and steps that the new government initiates during its tenure.
Tenderpreneurs: There are many who doubt the ability of the new government to change the state of governance in Meghalaya. The fact that this is a multi-party coalition government is one such factor, as the Chief Minister will have to manage and accommodate the demands of MLAs and leaders of the five political parties that are part of the coalition. Considering that huge financial investment was made by candidates and parties across the political spectrum in the recent elections, every effort will now be made to recover the investment. For those in government, this involves abusing their political power to influence and secure government tenders and contracts to enrich themselves at the cost of the people of the state. In South Africa there is a name for such activity and it is called tenderpreneur. Many will agree that in recent years we see the emergence of this class of people in Meghalaya.
Conflict of Interest: Another complication that the new Chief Minister faces is the presence of individual(s) in the council of Ministers with business interests, whose company(ies)are executing government contracts, a situation that caused considerable damage to the reputation of the previous government. Conflict of interest in public sector is said to occur when public officials have private-capacity interests which could improperly influence the performance of their official duties and responsibilities. In order to safeguard and minimize the risk to his government’s reputation, the Chief Minister will have to avoid even an apparent or perceived conflict situation in the discharge of public duties by his ministers. In India, the Code of Conduct for ministers lays down stipulations for the Minister and his family members to follow in order to minimize conflict of interest. However, as reported by India Today in 2010, the provisions of the Code have not been strictly observed in the country. Can the Chief Minister ensure strict observation of the Code by his council of Ministers?
Plugging the leaking bucket: One of the main issues plaguing the state’s revenue mobilization efforts, are, the lack of strong remedial measures to plug loopholes and leakages taking place through systematic evasion and fraud in payment of taxes and mineral royalties. While many of the state taxes are now subsumed under GST,administration of state excise taxes- which in Meghalaya is the second highest contributor to state own tax revenue but with low buoyancy- is still with the state government and thus an area where serious reforms can increase revenue collection up to three times the present level (as per some studies). Many of the state governments in India have adopted the Tamil Nadu excise model and IT enabled supply chain management system to streamline and track the wholesale and retail trade of IMFL in real time in order to check revenue leakages.
The state government has also failed to increase contributions from social and economic services (other than royalties on minerals and forest) due to low user charges and this is acknowledged in the government’s Fiscal Policy Strategy statement of 2014-15. In many cases, recovery rates from social and economic services is as low as two percent of revenue expenditure due to absence of rational user charge policy. This aspect of non-tax revenue mobilization requires attention of the new government.
Expenditure reforms: With the implementation of the Fifth pay commission (FPC), revenue expenditure component will further increase from its present level. This situation along with limited scope to significantly increase revenue will adversely curtail this government’s ability to spend on capital projects and public services. In this context, there is need to optimize government staff strength and improve efficiency in the delivery of public services. In Meghalaya, irregular attendance of government officials particularly those posted outside the state capital and lack of supervision of projects are major hindrances in efficient service delivery to citizens. Many countries are using Mobile based GPS attendance tracking system to keep track of employee’s attendance and also monitor on-site progress of works. It is time that the government considers adopting such technology enabled systems to tackle these chronic problems.
A common and amusing sight in our state is that every year towards the end of March there is a flurry of activities in otherwise dull and deserted government offices with officials sitting till late night to be able to exhaust funds allotted to their departments – an exercise leading to sheer drain of financial resources without meaningful outcomes. This practice can be regulated through proper monitoring of the flow of funds to departments throughout the year and appropriating expenditure ceiling to prevent rush of expenditure in the last quarter/month of financial year.
There are 14 state PSUs in Meghalaya which are in poor financial health and they continue to draw investments in the form of equities and loans with almost negligible contribution by way of dividends and interest income to the state exchequer. The new government needs to take a call on withdrawing from some of these units through strategic disinvestment or outright sale. A performance audit of the Meghalaya Basin Development Agency is also required given the curiosity surrounding this programme and substantial resources having been devoted to this activity.
Setting an Example: I’m sure that the Chief Minister is well aware of the issues raised in this column and also of the challenges that he faces in changing the deep rooted culture of corruption, profligacy and inefficiencies afflicting our government, particularly in a situation where his government is propped up by parties who may not share the same vision.While the task is not impossible, it calls for deft statesmanship and persuasion of the motley group that he leads. More importantly, his leadership and leading by example would be most useful. Here I want to make a humble suggestion.
The state has spent about Rs 20 crore or more for building the CM’s official residence. The mammoth complex does not behove the poor financial status of the state particularly when many of the basic necessities of the citizens are not being addressed for lack of resources. Given this, would it be possible for the Chief Minister to consider an alternative modest official residence and to find another use for the present residence, say a Government run Children Hospital Cum Research Centre dedicated to the children of our state, considering the high child mortality in Meghalaya? This would send the right signal to all.
(The writer teaches Economics in NEHU)