Guwahati, Sept. 2: Dangling a bait worth Rs 2,000 crore in loan from the Asian Development Bank (ADB), the Centre has asked the cash-strapped Assam government to carry out a series of harsh fiscal reforms, including a freeze on dearness allowance.
A highly-placed source in the state finance department told The Telegraph today that the Centre had asked the Tarun Gogoi government to pay only basic salaries to the workforce as part of the medium-term fiscal reforms process. He said the state would get the Rs 2,000-crore loan only if it continued the process.
Considering the risks involved, the state government has been hedging on the issue. It fears that a freeze on dearness allowance would provoke the workforce into paralysing the administration, as it has on several occasions in the recent past.
Chief minister Tarun Gogoi had linked the expansion of his ministry to the expected loan, saying more ministers would be required to monitor the slew of schemes that he planned to launch with the money. AICC observer Mohsina Kidwai, too, said much the same while justifying the expansion. She said the loan from ADB would add to the workload of all ministers and it would not be fair to burden some of them with multiple portfolios.
Frank J. Polman, the country director of ADB, had announced the loan after discussions with the chief minister. He said the bank would be glad to give Rs 2,000 crore to Assam for power-sector reforms, improvement of roads and urban development.
If the state gets the promised money, it will be the fourth in the country to benefit from the ADB’s largesse. Gujarat, Madhya Pradesh and Kerala have already received assistance from the bank.
In a bid to convince ADB that he meant business, Gogoi had effected a 25 per cent cut in the monthly pay of ministers, including his own. Simultaneously, he announced a 20 per cent cut in travel expenses and a ceiling on telephone calls. This was two days prior to Polman’s assurance that ADB would help the state bring its economy back on track.
Last month, the government announced more steps aimed at reducing government expenditure. A finance department official said the Centre had, however, refused to endorse the decision to take a loan from ADB unless the government agreed to freeze dearness allowance. “Dispur is planning to cite regular payment of dearness allowance to Central government employees as the reason for not being able to convince state government employees to accept only basic pay.”
The PCC has added to the pressure on the Gogoi government by announcing that it would review the party’s poll manifesto to find out how many of the promises have been fulfilled. State Congress general secretary Haren Das said the process would begin after the new PCC’s first executive committee meeting, slated for September 15.
With the debt burden totalling Rs 14,000 crore, the Gogoi government has not been able to implement the development schemes it had promised to the electorate. Eighty per cent of its revenue goes into payment of salaries.