Assam’s growth claims under scrutiny amid rising debt

Assam’s rising debt and expanding welfare schemes raise doubts about its economic growth. Critics question the sustainability of increasing loans and cash transfers.

Guwahati – Assam’s economic narrative, championed by Chief Minister Himanta Biswa Sarma, is facing increasing scrutiny as a burgeoning debt burden casts a shadow over claims of rapid development. The recent state budget, coupled with the government’s aggressive loan acquisition strategy, has ignited a debate about the true state of Assam’s finances.

Chief Minister Sarma’s administration has consistently emphasized infrastructure development, particularly road projects, fueled by substantial loans. The state budget presented on March 11th by Finance Minister Ajanta Neog, outlining a ₹2.63 lakh crore expenditure with a ₹620.27 crore deficit, further highlighted this approach. The Chief Minister, following the budget release, asserted that Assam is now the fourth fastest-growing state in India economically.

However, the rosy picture painted by the government is challenged by stark figures. In response to queries from Independent legislator Akhil Gogoi, Finance Minister Neog revealed that Assam’s total outstanding liabilities as of March 31, 2023, stood at a staggering ₹1,15,751.32 crore. This marks a significant increase from ₹82,741.09 crore in 2021, revealing a rapid escalation in state debt.

Data presented by the Finance Minister revealed a dramatic rise in annual loan acquisition: from ₹5,649.45 crore in 2016-17 to ₹25,902.16 crore in 2022-23. The total outstanding liabilities, which were ₹35,690.22 crore in 2016, have more than tripled under successive administrations.

While the government maintains that loan repayments are underway, the sheer volume of debt raises concerns. Chief Minister Sarma, in a press briefing, projected a budget expenditure of ₹1,75,000 crore by 2025-26, claiming that Assam is among the states with the lowest loan intake, and that Assam’s GDP growth surpasses the national average. He also pointed to amendments to the Assam Fiscal Responsibility and Budget Management Act, justifying increased borrowing within permissible limits.

However, these assurances have failed to quell public apprehension. Critics argue that the escalating debt burden poses a significant risk to the state’s future. Historical data reveals that Assam’s per capita income, once above the national average, has declined significantly since independence and further after liberalization, raising questions about the long-term sustainability of the current economic model.

Furthermore, the debt accumulation trend began under former Chief Minister Sarbananda Sonowal, who oversaw the acquisition of ₹66,000 crore in loans. Sarma’s administration has continued this trend at an accelerated pace.

While other states like Tamil Nadu, Andhra Pradesh, and West Bengal also grapple with substantial debt, the question remains: if Assam’s revenue generation, through SGST and CGST, is robust, why the relentless pursuit of loans?

The discrepancy between the government’s optimistic projections and the stark reality of rising debt has fueled skepticism. As Assam embarks on its ambitious development journey, the need for a transparent and sustainable fiscal strategy has never been more critical. The public demands a reality check, ensuring that the state’s growth story is built on sound economic foundations, not just borrowed prosperity.

This apparent contradiction becomes even more pronounced when viewed alongside the NITI Aayog’s latest Multidimensional Poverty Index (MPI) report, which highlights significant poverty reduction across India. According to the 2024 report, 248.2 million people were lifted out of poverty between 2013-14 and 2022-23, with India’s overall multidimensional poverty rate halving from 24.8% in 2015-16 to 14.96% in 2019-21. The report attributes this progress to targeted government interventions and improved access to essential services. States like Uttar Pradesh, Bihar, Madhya Pradesh, and Rajasthan have reportedly made substantial strides in poverty alleviation. However, in Assam, the ground reality appears to tell a different story. If poverty in the state has genuinely declined, why is the government simultaneously expanding direct cash benefit schemes at an unprecedented scale?

This paradox has sparked critical debates among both scholars and ordinary citizens. If poverty is indeed reducing, why do the scale and budget of welfare schemes like Orunodoi continue to expand? Why is there a growing dependence on cash transfers instead of investments in long-term solutions like employment generation, education, and healthcare? Additionally, concerns persist over the lack of transparency regarding the returns on investment and cost-benefit analysis of these schemes. These fundamental financial assessments should be conducted by the government and made publicly available.

The NITI Ayog report

The MPI report, which provides detailed estimates for India’s 36 States and Union Territories, as well as 707 administrative districts, underscores the government’s commitment to addressing poverty at the grassroots level.

Crucially, the report shows statistically significant reductions across all 12 indicators spanning the three dimensions of Health, Education, and Standard of Living. Notably, significant progress has been made in improving sanitation and access to clean cooking fuel, areas that directly impact the quality of life for millions.

The NITI Aayog report emphasizes the pivotal role of various government initiatives in driving this positive change. It also reaffirms India’s commitment to achieving the Sustainable Development Goal (SDG) 1.2 target of halving poverty in all its forms by 2030.

The paradox of progress: Economic growth and persistent poverty in Assam

The Assam government, under the aegis of the BJP, consistently trumpets the state’s burgeoning economic growth. Yet, this narrative is increasingly dissonant with the reality of persistent poverty, evidenced by the government’s own continued investment in direct cash transfer schemes. The expansion of the Orunodoi scheme, increasing beneficiary numbers to 3.75 million women and boosting monthly payments to ₹1250, is a stark illustration of this paradox and a matter of considerable concern.

While such social welfare programs offer immediate relief and potentially stimulate local economies through increased consumption, they also raise critical questions about the sustainability and efficacy of the state’s development model. If Assam is indeed experiencing robust economic growth, why is the pool of economically backward women seemingly expanding, necessitating increased public expenditure on such programs?

The question which are being ask today by both intellectuals and the common person is if poverty is reducing then why the cash benefit schemes amount and numbers are increasing day by day? Besides, there are legitimate questions which are being raised on returns on investment and the absence of cost benefit analysis. These are basic arithmetic which has to be done by the government and shared for public consumption.

The government’s reliance on cash distribution could be interpreted as a short-term fix, addressing the symptoms of poverty rather than tackling its root causes. Are the benefits of economic growth trickling down to the most vulnerable segments of society? Or are structural inequalities, lack of access to education and healthcare, and limited employment opportunities perpetuating a cycle of dependence?

The debate surrounding Orunodoi and other emerging cash transfer schemes, even touching the state’s student communities, highlights the need for a more nuanced understanding of Assam’s economic landscape. A critical assessment must move beyond headline growth figures and scrutinize the distribution of wealth, the quality of employment generated, and the effectiveness of long-term strategies to empower women and eradicate poverty.

This contradiction is further highlighted when juxtaposed with NITI Aayog’s assessment of multidimensional poverty reduction across India in recent years—particularly in Assam, where the ground realities seem to tell a different story.

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