A simple example of two months salaries of Government employees which is the main source of money supply, paid once in three months, drastically diminishes cash availability for circulation. Such reduction in circulation of money in turn takes away purchasing power of the people resulting in drastic slowing down of economic and trading activities that the entire economy is thrown out of gear. The State is in the grip of severe economic depression for several years and people are going through great hardship with no silver lining in sight. In fact, large scale unemployment because of this depression is one of the major causes of political and social unrest. The unfortunate fact is that we see the State sadly withering away bringing untold suffering to the common people.

Let us analyse the State's financial position for the last decade or so, as to how we have come to this situation. It is worth mentioning that Manipur was complemented by the then Union Finance Minister Dr. Manmohan Singh as the best financially managed State in 1993. However President’s Rule was imposed in 1994 till general election in 1995 February during which the financial health of the State remained more or less the same. Popular Ministry again assumed office after general election in Feb. 1995 with concomitant laxity in management and control. In fact, control or discipline can only be ensured through good management which again can only come from a will to give good governance. This is more so where the State’s own resource accounts only for 6% of its expenditure, - the rest coming in various forms from the Central Govt. i.e. Finance Commission’s Award, including share of central taxes, plan assistance, including external assistance, Centrally sponsored schemes, NEC assistance etc.

The good reserve that was built up had been drained away mainly through indiscriminate appointment in jobs and unproductive expenditure. This is not to say that they are not to be done at all but they ought to be planned with a vision in relation to the limited available resource. The impact came suddenly in 1997 October when Govt. of India deducted a whopping Rs. 48 crores on account of power purchase from source plunging the State finance into a crisis of running into huge overdraft.

This is the direct result of indiscriminate purchases by the Dept. and keeping a blind eye on other inescapable expenditure. Added to this is the creation of Barak Development Authority to which annual grant of Rs.6 cores was to be sanctioned and another grant of Rs. 8 crores also sanctioned for Eastern Society. Moreover, it is during this time that large scale fake appointments which is estimated to have defrauded the State exchequer of several crores each year, surfaced for the first time.

This was also the time when Manipur was to host the National Games. Construction of infrastructures and stadium complex is stated to have further pushed up the deficit by about another hundred crores or so. This case is however entirely different and justified because permanent assets were created and the borrowings were considered to be well spent, whatever some people may say.

Employees with fixed salaries are most hard hit by inflation and when the burden becomes too heavy, relief is given through pay revision etc. The Central Government revised pay of their employees without consulting the States whose employees were equally affected by it. Thus, in principle, adoption of Central pay was the logical course of action. However, pay structures then existing, nature of duties, places of posting etc. of employees of different employers need to be moderated and rationally categorized. The initial decision was adoption of revised Central pay. However, in the name of sorting out anomalies, the same was virtually converted into Pay commission. Even so, terms of reference is drawn up in case of any revision of pay. Thereafter, implementation fully or partially has to be necessarily done in relation to availability of resource. 

Other factors like increasing productivity and efficiency ought also to be taken into account. Instead, there are cases of categories of post graded higher then Central scales. These apart, the decision to give retrospective revision added a burden of Rs. 200 to 300 crores. Despite all these short comings, some belated compensatory awards could have been obtained if the Government had presented Manipur’s case with regards to revision of pay, taking up of some important projects to strengthen infrastructures and maintenance of roads, buildings and meeting committed liabilities of plan properly to the 11th Finance Commission. This opportunity was not availed of.

With a cumulative deficit of around Rs.600 crores in 2001-02, it was difficult to even temporally wipe out this to bring the State account to a workable level. Being aware of the poor resource base of the State, the Centre Government had been generous enough to give a medium term loan of Rs. 371 crores with moratorium till award of next i.e. 12th Finance Commission. To this, additional cash assistance of Rs. 50 crores in 2002-03 and Rs.70 crores in the current year annual plan were given.

Despite these, the closing deficit in 2002-03 however was Rs. 312 crores. This generous assistance was given on the assumption that the State Government will make every effort to plug loopholes and enforce financial discipline by curtailing wasteful expenditure and investing only in priority sectors.

These appear to have been belied. The Central Government seemed to have discovered that State interest is not always the guiding principle after finding out that expenditure shown as incurred under Centrally sponsored schemes, non-lapsable funds, BMS/PMGSY are from different budgetary heads though under the same demands. Therefore, the State Government is unable to furnish correct and acceptable utilization certificates. Also, actual assets created/constructed and coming up on the ground are not found to be commensurate with the investment made. The unfortunate result is forfeiture of the trust of the Centre. After establishing the State Government’s trustworthiness, the next step would have been to justify our case for writing off Rs. 371 +312 (closing deficit of 2002-03)= Rs.683 crores and then asking for a financial package as considered deserving to develop the State. However, with the State’s credibility becoming the casualty we have slided down to the bottom of the ladder. And the question being asked now is who can rise to the occasion to overcome this and revive the shattered economy of Manipur.

*** The writer is a MLA and former Minister

Courtesy: The Sangai Express