The Associated Chambers of Commerce and Industry of India (ASSOCHAM) has prescribed economic rejuvenation for Assam by increasing revenues and creating conducive business environment with robust infrastructure.
“Nearly 70% of Assam’s revenue comes from the Centre by way of grants. The state’s tax revenue collections account for less than one-fourth of total revenue receipts,” said ASSOCHAM secretary general D.S. Rawat. “But the expenditure incurred on tax department is higher that the revenues it collects.”
Higher revenue would depend on improving the functioning of public administration since quality of public services need to be ensured for collecting taxes and user charges, he added.
“Despite possessing abundant natural resources, the financial resource base of the state is weak. The fiscal health of the state has not been allowing it to pursue development and social policy objectives. Fiscal reforms undertaken so far have partially addressed this issue. Unless it is addressed effectively, the development process could be further affected,” Rawat said.
Assam’s economy grew at a compounded rate of 5.3% between 2000-01 and 2009-10 compared to the national average of 8.7%. ASSOCHAM attributed this to low level of investments and industrialization, difficult geographical terrain, migrants from Bangladesh, infrastructure deficiencies and poor level of urbanization.
Assam, ASSOCHAM pointed out, could achieve the targets of Fiscal Responsibility and Budget Management Act (it requires every state to phase out revenue deficit by 2008-09). But its public debt jumped from Rs 10,227 crore in 2000-01 to Rs 25,053 crore in 2009-10.
ASSOCHAM has thus suggested improvement in public finances for rejuvenating economic activity in the state. The success in realizing growth potential comes from providing conducive environment that help take advantage of liberalized policies, it added.
“Assam, the largest of 10 special category states in the country, must reduce unproductive subsidies and realize that private investments go to states with good infrastructure, flexible labour laws and transparent administrative rules. Emphasis should also be put in stepping up public investments in agriculture,” said Rawat.
He also advised the state to focus on loss-making public enterprises and stop raising debt further to meet revenue expenditure.