In a detailed economic analysis, Anil Counto, Chairman and Managing Director at ALCON (Anil Counto Enterprises) elaborates on the current economic scenario in Goa and recommends solutions to pull out the state from its gripping economic crisis
Goa is on the threshold of growth. The Mopa airport that was recently inaugurated will boost tourism and cargo logistics in the state. The auctioning of Mining as per the latest advice of the Supreme Court, which was a long pending issue, appears to be on a path of resolution. The Government of Goa will earn fair amount of revenue from mining auction on an annual basis and export revenue on a per ton basis. Goa can arguably have the highest GDP as well as per capita income in India provided there is less political intervention and corruption.
In June 2012, when Manohar Parrikar took over the reign of Goa after the BJP got a decisive mandate and before the closure of mining in Goa; mining and hospitality were the two life-lines of the state on the economic front.
Since then, it is argued that the following industry verticals should be considered for a turnaround for a prosperous Goa on the economic front and outlined them in the order of preference. They are: mining, tourism and hospitality, knowledge economy, agriculture, horticulture and floriculture, pisciculture, animal husbandry and poultry, IT and IT-related ancillaries, pharmaceuticals, Mormugao Port and Docks, renewable energy, and other industries.
The above industry verticals are divided into three main economic segments, viz. primary economic sector, secondary economic sector and tertiary economic sector.
However, covid-19 and the devastating closure of the entire mining sector changed the entire economic format of the state.
Businesses and industries were totally or partially hit resulting in diminished revenues to all business ventures as well as to the Government in terms of reduced taxes and revenues. The financial year of 2020-21 and 2021-22 have been totally disrupted by the fall in revenue in every business. Thus, two to three years more would be needed to make up for the shortfall.
Positive Growth Signs are seen and this is possible if and only if both the public and private sector players are in unison and with total cooperation. The government should mainly look after the governance, and the private enterprise should act and deliver the goods responsibly. A sincere joint public-private sector participation and co-operation will help considerably. Today, we cannot be dependent on the mining sector anymore due to the vagaries of the international market forces and because of the spike in export duty. The GOI, in principle, has decided to give more importance to local manufacturing of iron and steel through ‘Atmanirbhar Bharat.’ Henceforth, India has to develop the technology for iron-ore gradation to utilise Goan iron ore as well as high-grade iron ore from other parts of the country for steel production and try to compete with China, which has mastered the technology to upgrade low-grade iron ore.
In order to increase the GDP (Gross Domestic Product) or GVA (Gross Value Added), we have to concentrate on every economic sector viz Primary, Secondary, and Tertiary economy sectors.
The three should be given due importance in the following order: The primary sector which deals with raw materials, the secondary sector deals with manufacturing and the tertiary sector deals with services.
The primary economy sector in Goa has not been explored to its full potential.
As far as Goa is concerned, the primary economy can be categorised in the following industry verticals, which are agriculture, horticulture, floriculture, pisciculture, animal husbandry and poultry, forestry, and mining sector, mainly raw materials.
In the Secondary economy: The pharmaceutical industry and other large and MSME industries are situated in the government industrial estates i.e. all kinds of manufacturing industries can be included.
In the Tertiary economy: tourism, hospitality, information technology, knowledge economy, entertainment and finance, and all types of service industries are to be included.
The primary economy requires adequate attention and also tertiary economic sectors for the State’s GDP growth. The Secondary economy sector will definitely help as it is connected with all SMEs and also small and large manufacturing units. Growth and proper planning of primary and tertiary sectors can become a game-changer for employment which will boost the economy of the State.
Primary economy sector:
1. Agriculture: The Goa Government should come out with special incentive schemes for land owners, either to join together and bring at least 25 acres of land under one umbrella, by safeguarding the individual owners’ lien on the land and allow them to make some sort of consortium and convert this land for agricultural purpose to produce different agricultural products. Today, with digital advancement, and enabled ideas and new technology wide varieties of agricultural products can be grown, which enables forward integration and improves the growth of the secondary economic sector.
A special incentivised scheme can be drafted which could encourage tenanted land as well as uncultivated land, including orchard land, and encourage tenants and landowners to come together under a special scheme to allow such land to be leased to private entities, with clear and specific conditions so that the owner does not lose his / her right on land but also the tenants, as well as the land owners, get the benefits that their land is given for a productive cause. The Government of Goa or the private sector should work out a credible scheme on the above lines.
2. Animal Husbandry and Poultry: This vertical can be handled in such a way that a special incentive scheme is worked out by the government so that many related products can be processed. The required attention and weightage has not been given to this primary economic sector. Collateral products and by-products from animal husbandry, especially from the cow and allied animals should be used for commercial purposes. 50% of milk requirement in Goa is being met from outside the state. The government says that this milk is adulterated and not good for consumption. Cow dung as well as cow urine and many other collateral by-products can boost Goa’s economy as well create more employment if proper attention is given and their use explored, professionally.
3. Forestry: Goa has significant forest area private as well as government which are approximately 34%. This is much higher compared to the forested area in the country. Yet, the forests do not yield any tangible benefits to the GDP and growth of Goa. A scheme has to be worked out without disturbing the delicate ecology and environment to make use of these areas for GDP as well as employment generation.
4. Fishing and Pisciculture: Goa has many rivers and rivulets and more than 150 kms of sea frontage. Special schemes may be provided to explore fishing in the inland waters as well seaward side. Again through this vertical of the primary economic sector, huge employment can be generated and use of latest technology to explore this industry for fishing and allied products can be done giving good results.
5. Floriculture and Horticulture: Goan land is the most ideal place for the growth of this industry viz Floriculture and Horticulture. Every day, tons of goods in this sector come to Goa from different places. The area by the side of roads can be developed for horticulture which will also beautify the roadsides and driving will be a pleasure. The hinterland can be used for horticulture – to grow different types of fruits and vegetables, which will help the secondary economic sector as a forward integration for canning and other types of industries.
6. Mining: Due to legal restrictions on extraction, sale/export of iron ore, we may not be able to secure the same benefits which Goa used to get before the closure of the mining sector. The government can promote this sector as a raw materials provider for internal consumption in India and mining can be explored within the strict framework of the Government of India and mining rules and regulations.
The Government of Goa should give importance and come out with some beneficial schemes for aggregate business, manganese business as well as special high-grade iron ore business. Goa Government, as well as Goans, should address this mining business differently and think of ‘out of the box’ solutions which are implementable.
Proper strategy should be adopted to use these raw materials for the upliftment of the secondary economic sector – is manufacturing as well as the growth of the tertiary economy, which is the service industry. Goa does not provide adequate raw materials which are normally required by the manufacturing industry, thus these are procurred from other parts of the country. Raw materials can be used by the industry for forward integration as an input to the state’s industry and finished products can be sold to other parts of the country if the product is in excess.
Borrowings and Debt
Goa is burdened with a huge debt of more than 20 thousand crores. Moreover, routine installment of compensation cess from the Central Government has also been discontinued and a recent working paper released by the Central Agency has stated that Goa, besides Punjab and Chattisgarh will have a serious financial crisis post stoppage of compensation cess under GST. Under such circumstances, it is high time that the state government and its people urgent steps to revive and rejuvenate the Goa’s economy.