Sanjay Pandey
The Jharkhand government’s recent move to set up a committee for determining and recovering the outstanding central dues of Rs 1.36 lakh crore from Central Public Sector Undertakings (PSUs) marks a significant step in a long-standing financial dispute. However, the issue extends beyond just numbers and legal battles; it is deeply intertwined with federal fiscal relations, governance efficiency, and the state’s financial sustainability. The delay in the recovery of these dues and the broader implications of Jharkhand’s fiscal health raise serious questions about governance, political will, and economic planning.
Jharkhand’s Minister-in-charge Yogendra Prasad revealed during the Budget Session of the Assembly that the committee had been formed on March 1 to assess the exact dues and submit an affidavit. The response was prompted by MLA Saryu Roy’s pointed question on why the state government had not taken stronger action despite the matter being sub judice in both the High Court and the Central Tribunal. The state government’s repeated appeals to the Centre, including letters from Chief Minister Hemant Soren and former Chief Secretary Sukhdev Singh, highlight its persistent yet seemingly ineffective attempts at resolving the issue.
The need for Jharkhand to recover these dues cannot be overstated. The state, which heavily relies on revenues from mining and industrial activities, faces financial constraints in meeting its development and welfare obligations. With a fiscal deficit that hovers around 3.5% of its GSDP, Jharkhand’s ability to fund critical infrastructure projects, social welfare schemes, and salary payments is constantly under pressure. The failure to secure these pending dues exacerbates these challenges, forcing the government to depend on borrowing and grants.
Experts argue that the delay in settling the dues could be attributed to multiple factors, including bureaucratic inefficiency, lack of legal clarity, and political reluctance. Senior economist Usha Sunil suggests that the absence of a structured mechanism for intergovernmental financial disputes weakens Jharkhand’s position. “The Centre and states often find themselves in financial disagreements, but in the absence of a strong dispute resolution framework, these issues get prolonged. Jharkhand must ensure that its legal claims are airtight and pursue negotiations rigorously,” she states.
Political commentators believe that the Centre’s reluctance to clear these dues may be linked to broader political dynamics. Given that Jharkhand is ruled by the opposition party, the ruling dispensation at the Centre may not be keen on facilitating funds that could politically strengthen the state government. The Centre-State financial relationship has often been marred by such political considerations, leading to delays that ultimately affect governance at the state level. “It is no secret that Centre-State financial dealings are often influenced by political equations. States governed by opposition parties frequently find it harder to secure their rightful dues,” notes political analyst Anil Mehta.
The delay in receiving these dues forces Jharkhand to rely on alternative revenue streams to sustain its expenditure. The state’s revenue primarily comes from mining royalties, commercial taxes, excise duties, and central grants. However, these sources are insufficient to bridge the gap left by the non-receipt of the pending Rs 1.36 lakh crore. The state’s annual budget hovers around Rs 1.20 lakh crore, and the absence of the pending dues has forced the government to take loans and defer several developmental projects.
Despite the financial crunch, Jharkhand has managed to maintain its regular administrative expenses, including salaries, pensions, and welfare schemes. However, without the outstanding dues, the state has struggled to initiate large-scale infrastructure projects or improve healthcare and education services at the desired pace. In contrast, states that receive their rightful financial allocations and pending dues in time are better positioned to accelerate their development agenda.
Another critical aspect of this issue is the impact on investor confidence. Delayed payments from the Centre create a perception of fiscal instability, discouraging private investments. Jharkhand, with its vast mineral resources, has immense industrial potential, but consistent financial bottlenecks reduce its attractiveness to investors. If the state were to recover its dues, it could enhance its economic prospects by investing in key sectors like industrial infrastructure, education, and healthcare.
Economists argue that a more assertive legal and administrative approach could yield better results for Jharkhand. Instead of merely writing to the Centre, the state government should push for a legally binding resolution, involving independent arbitration if necessary. “The legal route is slow, but it remains the most viable option if political negotiations do not yield results. Jharkhand should explore avenues such as the Finance Commission’s intervention or an independent tribunal,” suggests constitutional expert Ramesh Chaturvedi.
The broader question remains: How long can Jharkhand sustain its economic growth without these funds? While the state government has demonstrated resilience in managing its regular expenses, long-term financial sustainability requires access to rightful revenues. The funds owed by the Centre could significantly reduce Jharkhand’s fiscal deficit, allowing it to invest in critical sectors without increasing its debt burden.
With the formation of the committee, Jharkhand has taken an important step, but the real challenge lies in ensuring that this initiative translates into actual recovery of funds. The state government must go beyond administrative procedures and adopt a multi-pronged strategy, including legal action, political negotiations, and public advocacy. Transparency in the process is also essential; regular updates on the committee’s progress and a clear roadmap for fund utilization will strengthen the government’s credibility.
The unresolved financial dispute between Jharkhand and the Centre underscores the larger issue of federal financial relations in India. The need for a structured and timely mechanism to address such disputes cannot be overstated. If Jharkhand succeeds in recovering its dues, it could set a precedent for other states facing similar financial issues. Ultimately, the resolution of this matter is not just about one state’s finances but about strengthening India’s fiscal federalism and ensuring that financial entitlements are honored irrespective of political affiliations.
( Author, a seasoned bilingual journalist, is an expert on Jharkhand’s sociopolitical landscape.He can be reached at pandeysanjay945@gmail.com)
