Goa’s Looming Economic Crisis and its possible Solution

Shalom Sardinha

Shalom Sardinha

Shalom Sardinha is a lawyer in the Indian state of Goa. He is also a qualified Mechanical engineer with a masters in management (MBA).

To say that Goa is seeing an unprecedented economic slowdown would be a clear understatement. Post Global Financial Crisis which commenced with the collapse of premier American banks like Bears & Sterns as well as Lehmann Brothers in 2008 lead to severe consequences to the world economy resulting in a decline in construction and real-estate prices – there were lame signs of course correction just as when the Covid19 a.k.a. China Virus took the world by storm. The subsequent lockdowns which impaired almost all business and corporations has left a severe dent, the aftermath of which I am sure is going to last for a long time to come. The Goan Economy which primarily depended on Tourism and Mining for its major Contribution has been plunged into a deep Abyss and it looks like it is at the point of no return. The first blow was the stopping of mining by the earlier Chief Minister Mr. Manohar Parrikar who in his indominable style and overconfidence stopped Mining in September 2012, leading to the Union Minister for Environment Mrs Natrajan driving in the final nail into the Mining Coffin by revoking the Environmental Licenses. The sudden increase in the number of Covid-19 cases and the looming apprehension that the State will undergo another lockdown has impacted countless business ventures in the state leading to a great many default in repayment of loans as well negative growth across the sector. Our State Debt, now over Rs.25,000 crore is increasing with every passing day and the Government is floating more and more bonds resulting in our debt growing leaps and bounds to allow the State to pay salaries to the Government Servants, which incidentally is the highest per capita in the Country,

I do not want to waste too many words to explain the pains suffered by all and sundry as everyone is very much aware of the pain albeit at different levels and intensity. Politicians across the political spectrum are wasting no time to see how well they could spin the situation to blame their opponents to win the upcoming elections barely a year away. If they are missing something it is a focus to find a credible solution to help the State overcome this mammoth debacle. Hence let me focus on some credible solutions which our State, government as well as private sector, can implement to get out of this mess.

To solve any complex socio-economic problem such as the post-pandemic world, we need to understand the fundamental nature of the problem. This is clearly a complex task one that needs a significant understanding of micro & macroeconomics, geo-politics, International finance as well as law. Clearly, none of our politicians are qualified in all the areas. Worse, they are not even interested in taking time out to explore possibilities which can steer our State towards a clear solution. The very fact that everyone is speaking about lame quick fixes instead of visionary and futuristic solution is a cause of grave concern.

I remember the works of Kautilya, who in his version of Arthashastra, advised his ruler Chandragupta Maurya of the famed Maurya Empire to seek advice of competent and credible people of character, when the situation appears to be complex. Also, the Government needs to act tough and bring in some austerity measures along with strengthening our overburdened Infrastructure especially in the Health Sector instead of spending the grants given by the Centre over things like enjoyment, festivals etc. But will the Government consider the population of this great State as a priority instead of the municipal elections (which incidentally can be delayed and the controls can be given to our competent Municipal Officers), something which no government seems to be even considering (given that there is nothing in it for the political class).

The Goan economic situation is no doubt complex. But being a small state we’ve our own advantages. Principally, we are least populous state with sizable, educated population with certain skillsets. We have unprecedented ability as a state to implement solutions at rapid pace should the political class feel the need to do so. Hence, we see that laws which benefit our elected representatives are passed at lightning speed while those that may benefit the general population take eternity to see the light of the day. Hence, if only our government can show sheer willingness to implement the following solution, things should work just fine.

Amid the Covid crisis there are several crises looming across other nations. Like it or not, China as the manufacturing center of the world is clearly no more an option. Americans followed by British, Europeans, and Australians have begun exiting China. With Brexit almost confirmed the European Union woes are soon to worsen. Given the fact that Greece, Portugal, Italy, and Spain continue to be the Achilles heel of the EU, the brunt of their economic blunders are being faced by the likes of the Germany, France, Netherlands, and Belgium.

While Germany fancies itself as the undisputed uncrowned leader of the EU, the other three have no such fancies. In countries like Belgium and Netherlands there exists a situation where any individual with over one million euros is to pay a fee to the bank as against interest earned in India. Most of the companies from Belgium and Netherlands have been outsourcing their manufacturing from China but have been strongly looking for alternatives elsewhere. Besides, their low population provides them little scope for growth of their products and services. Nevertheless, these nations are in dire need of avenues for investments where they can also grow their businesses. Given the fact that these businesses are not nearly as large, their mid-size provides them a unique opportunity in Goa.

Should only the Govt of Goa open a line of communications with the leaders of these enterprises and seek most average investment of say fifteen million euros, it will not be a problem to get as much as one hundred and fifteen million euros (INR 13,383.9 crores). In exchange these investors would seek a few leeway including, but not limited to, relaxed taxes, faster approvals, and limited government intervention. Besides, most of the business in the said EU nations are greenfield (i.e., non-polluting projects) namely agriculture especially horticulture, food processing, packaging, robotics, chocolates, watches, and the like. It will not be a great challenge to train our fellow Goans in these businesses and to harness the synergies there will also be a need to engage our academic institutions, particularly engineering and ITI to create better and competent workforce that can match global standards.

Having associated with promising investment firms in US and Europe, I have observed from close quarters and am very certain with regards to the viability of this idea. But getting our political leadership to understand the situation and act proactively is the biggest challenge. Will some politician from the Government or some high Executive of the Government read and work on these ideas as soon as possible?

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