Problems of financing in Manipur (November 30)

Mobilization of resources for financing the development planning is a difficult problem in the developing economy. Resource mobilization implies the scheme of collecting funds for financing the development plan. Mobilization of resources through taxation and surplus from public enterprises is a major source of revenue for an economy but the revenue generated from these sources is not sufficient to meet the increasing requirements of expenditures of the state.

Therefore, the state government has to depend increasingly on public borrowing. The objective of this article is to examine the position of the public borrowing in the state of Manipur. It is quite obvious that the responsibilities of the state of Manipur have been increasing over the years resulting in higher and higher public expenditures.

But the revenue of the state has failed to increase in tandem with the requirements of expenditure. Therefore, to meet the increasing public expenditure, the state government of Manipur has to incur large debt. Thus the debt position of Manipur has assumed an alarming proportion in recent years. 

The composition of the state government debt includes the central loan, Market loans and bonds, loans from banks etc., ways and means advances from RBI, provident funds, etc., and reserve funds and deposits. The total debt of Manipur as on March 31, 2000 stood at Rs 1,63,915 lakhs, which is relatively higher than those of states like Meghalaya Rs. 1,13,105 lakhs, Mizoram Rs 1,09,663 lakhs, and Nagaland Rs 1,55,599 lakhs. 

It is evident from that out of total debt of Manipur, central loans and ways and means advances from RBI constitute the largest proportion. For example, the central loans recorded an amount of Rs 40579 lakhs while Ways and means advances from RBI registered an amount of Rs 41093 lakhs. Large borrowing has been the result of incapabilities on the part of state government of Manipur to generate adequate resources to meet the rising requirements of expenditures. 

The reason may be attributed to the failure of the state to mop up resources from taxation and surpluses from public enterprises on the one hand and failure to tap the tax potential fully on the other. Another factor is that the state has made no attempt to bring agricultural incomes in the tax net. The policy of prohibition pursued by the state has also wiped out an important source of its revenue. 

Large investments made by the state government in government companies and statutory corporations remain sterile over the years since most of public enterprises have been running on losses except few companies like Manipur Industrial Development Corporation Ltd., Manipur Electronics Development Corporations Ltd., Manipur Cement Ltd. and Manipur Tribal Development Corporation Ltd. 

In Manipur ten of the government companies in which government had invested Rs 37.92 crores were running at loss. While the interest on market borrowings during the year was 12.50 percent, the investment in government companies fetched only 0.06 percent (CAG report 1999). Thus, the government companies have failed to generate expected returns. Naturally, the emphasis on public debt has increased sharply. The state government's loans also offer low returns and thus fail to attract investors.

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