By: Dipak Kurmi
Assam, known for its rich cultural heritage and diverse landscapes, is currently facing significant challenges on the economic front. As the state gears up for the presentation of its budget for the year 2024–25, a closer look at the current financial scenario reveals a complex web of issues, ranging from resource crunch to outstanding debt.
Budget Utilization and Receipts: The utilization of budget provisions in the current year has been hampered by a resource crunch. With nearly 6.00 lakh employees on the payroll, the state allocates more than Rs 42,000 crore annually for salaries, pensions, and wages. However, only about 55 percent of the estimated total receipt of Rs 1.42 lakh crore has been collected so far. The delay in the release of the state share of Union taxes and grants from the Fifteenth Finance Commission further exacerbates the financial strain.
Related Posts:
Capital Account and Expenditure: The capital account front presents a gloomy picture, with 99 percent of the total capital receipt comprising borrowing. Out of the allocated Rs 27,495 crore, less than 60 percent has been realized, leaving a substantial gap in capital expenditure. As of December 23, only 54 percent of the total allocation for capital expenditure has been utilized, indicating a significant shortfall.
Employment Scenario: While the government sector shows a dynamic trend in employment with over 40,000 government jobs filled this year, the private sector remains cautious in absorbing unemployed youth. Initiatives to revamp MSME units are deemed necessary for private sector expansion and job creation.
Inflation and Economic Rankings: Assam’s year-on-year inflationary rate, as of December 23, stands at 5.33 percent, slightly below the national average. The state ranks 13th in inflation, with Delhi having the lowest rate and Odisha the highest. Despite efforts to enhance the Gross State Domestic Product (GSDP), Assam faces challenges, especially when compared to leading states like Maharashtra, Tamil Nadu, Karnataka, UP, and West Bengal.
Debt Burden and Repayment Capacity: Assam grapples with a substantial debt burden, equivalent to half of its GSDP. Outstanding liabilities, as of February 2024, total Rs 1.35 lakh crore, raising concerns about the state’s capacity to repay. The growth rate of debt over the last seven years is alarming, with Assam registering the highest among all states at 188.34 percent.
Interest Payments and Borrowing: Efforts to repay interest on borrowing are evident, with the state repaying 57 percent of the budgeted Rs 8,813 crore for the current year. However, the state’s ability to cover the gross market borrowing of Rs 17,000 crore from the previous year remains low, at only 5.8 percent. The need for a systematic repayment procedure is emphasized, given the increasing trend in gross borrowing.
Assam’s economic landscape presents a mix of challenges and opportunities. As the state navigates through budgetary constraints, outstanding debt, and employment dynamics, strategic initiatives and careful financial management will be crucial for sustainable growth. Balancing the needs of the public sector, reviving the private sector, and addressing the debt situation will be pivotal for Assam’s economic resilience in the coming years. (The writer can be reached at dipaknewslive@gmail.com)
