Growing Goa’s Economy

January 29, 2020


Focus on higher investments in sectors with high potential

The chairman of the 15th Finance Commission N K Singh lamented that though Goa has a huge potential in revenue generation, it has failed to exploit it. According to him, the state needs to take a combination of measures like increasing capital expenditure and eliminating transmission and distribution losses in the power sector and improving the quality of expenditure to generate future income to tackle the economic issues it was facing. There would be no disputing his view that agriculture was one of the key areas that had to be given better attention. Diversification was the key to economic progress. Tourism, one of the mainstays of the state’s economy, faces competition from other domestic and international destinations. Tourism has great scope for diversification and spurs growth in many areas. The state must fight the competition to get a higher share of the tourism pie. One of the ideas thrown up by the Finance Commission was to raise taxes on liquor to increase revenue. However, generation of more revenue should not dampen business growth. If that happens, the deceleration in business growth will neutralize the acceleration in revenue growth. The state government needs to take the criticism by the Finance Commission in a constructive spirit. The commission regretted that the state government had been irregular in the constitution of state finance commission and not implemented the recommendations of the two SFCs. At the same time, the Finance Commission appreciated Goa’s efficiency in utilising central funds allocated to it.

Goa has sought Rs 6,333 crore from the Centre, but it has
refrained from seeking a special package despite huge adverse impact on its
economy due to mining closure. The state wants to utilise the central funds
mainly for promoting organic farming, tourism development and disaster
management, besides other sectors. Having impressed the finance panel with its
presentation for seeking funds, the state authorities should straightaway begin
preparations for making the best utilisation of the funds. The state had a
large migrant population. The state lacked a strategy to deal with a large
floating population. The state has to formulate a robust skill development
infrastructure for Goan youth to avail of and join the workforce at various
levels. Migration of labour fills a gap which is there because local labour is
not available. The state needs to make policies and implement programmes by
which the gap is reduced to minimal. The state government should take the
comments of the finance panel seriously and comply with its recommendations to
put the state economy back on rail. A priority list should be drawn so that
works on the plans can begin straightaway after receipt of funds. They should
work overtime to comply with the request of the panel to provide it the data on
total holiday time spent by tourists in the state. The authentic data could be
crucial in allocation of funds for creation of the infrastructure needed for
tourism development including that in the hinterland.

With the 15th Finance Commission stating that Goa is the
jewel in India’s crown and that it wants the jewel to remain unblemished, it is
for the state authorities to work hard to make Goa a shining example. The
commission’s averment that fund allocation would not be dependent on the size
of the state but its progressive nature should give the state government
impetus for proper utilisation of central funds as well as of the revenue
mobilisation by the state itself in order to hope for getting higher
allocation.  With no plans drawn yet for
utilisation of funds promotion of organic farming it remains to be seen how the
state would utilise the funds for them. Given the fact that the funds have to
be utilised within a set time frame the state government needs to draw up plans
speedily and ensure that the plans are implemented. It is clear from the
findings and observations with respect to the evaluation of the 15th Finance
Commission that the state must make a priority list of sectors and sub-sectors
of the economy that it must focus on in order to attract investments or to
scale up investments. More investments will mean more production, more
employment, more tax revenue and more public and private spending to boost the
economy further.

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