Meghalaya targets $10 billion economy by 2028, but challenges remain  

Meghalaya’s 2025-26 budget lays out an aggressive spending plan, tripling the state’s expenditure over eight years and pushing for major private investments. While the government promises economic transformation, the state remains heavily reliant on central transfers, and its revenue generation challenges raise concerns about long-term sustainability.

The budget estimates total receipts at Rs 30,415 crore, of which Rs 20,568 crore—over 67%—will come from central transfers. While the state’s own tax revenue has nearly tripled from Rs 1,450 crore in 2017-18 to Rs 4,041 crore in 2024-25, the projected Rs 4,226 crore for 2025-26 remains a small fraction of total revenue.

The state government has set an ambitious target of doubling its Gross State Domestic Product (GSDP) from Rs 42,697 crore in 2023 to Rs 85,000 crore by 2028. The budget projects a GSDP of Rs 66,645 crore for 2025-26, with an annual growth rate of 12.7% between 2023 and 2026.

Chief Minister Conrad K Sangma, presenting his eighth budget, claimed that “the MDA government has been able to achieve a reversal of fortunes for Meghalaya and its people since 2018,” citing an 11% economic growth rate over the past seven years. However, the state’s reliance on external funding and slow progress in key sectors raises concerns.

High dependence on central funds
 
The budget estimates total receipts at Rs 30,415 crore, of which Rs 20,568 crore—over 67%—will come from central transfers. While the state’s own tax revenue has nearly tripled from Rs 1,450 crore in 2017-18 to Rs 4,041 crore in 2024-25, the projected Rs 4,226 crore for 2025-26 remains a small fraction of total revenue. Sangma acknowledged that “the period 2010-18 was a time of crisis for state finances,” but despite recent improvements, Meghalaya still struggles with revenue self-sufficiency.  

Further, non-tax revenue remains volatile due to legal hurdles surrounding scientific mining. While three mining licenses have been awarded and 20 more are in process, the sector’s contribution to state revenue is uncertain. The government is projecting Rs 797 crore in non-tax revenue for 2025-26, but past fluctuations suggest this estimate may not be reliable.  

Big spending, bigger risks
  
The total budgeted expenditure for 2025-26 stands at Rs 30,003 crore, marking a three-fold increase from Rs 9,858 crore in 2017-18. Capital expenditure is set at Rs 9,447 crore, a seven-fold rise from 2017-18 levels. While this increase suggests a push for infrastructure development, the state’s growing fiscal commitments bring risks.  

Meghalaya’s fiscal deficit is pegged at Rs 1,970 crore (2.96% of GSDP), below the permissible limit of 3.5%. However, debt obligations are mounting, with Rs 2,406 crore allocated for loan repayments and Rs 1,347 crore for interest payments. While the government claims fiscal prudence, the effectiveness of these investments will determine whether the debt burden translates into long-term growth.  

Private investment push and employment concerns
 
The government hopes to attract at least Rs 8,500 crore in private investment under the Meghalaya Industrial and Investment Promotion Policy (MIIPP) 2024. “To achieve our GSDP target, we need substantial private sector investments,” Sangma stated, emphasising the need for private participation. The new policy offers incentives such as capital investment subsidies, GST reimbursements, and employment mandates requiring 90% of non-managerial jobs to go to locals.  

However, past attempts to boost private investment have had limited impact. While companies like Varun Beverages are investing Rs 300 crore in a new plant in North Garo Hills, larger industrial projects remain scarce. The success of these initiatives will depend on improving the ease of doing business—an area where Meghalaya has historically lagged.  

Will Meghalaya meet its targets?
 
The state government’s vision document aims to place Meghalaya among the top ten Indian states in terms of per capita GDP by 2032. However, past economic data suggests a mixed track record. Meghalaya’s multidimensional poverty reduction between 2010-18 was only 4.8%, compared to Assam’s 13%, indicating slower progress in tackling poverty. While the government highlights an 11% growth rate since 2018, its impact on real wages and employment remains unclear.  

The budget lays out a high-spending, high-growth strategy. If Meghalaya can successfully leverage its planned infrastructure and investment policies, it could inch closer to its economic goals. But with heavy reliance on central transfers, an unpredictable mining sector, and challenges in attracting large-scale private investment, achieving the $10 billion economy target by 2028 remains far from guaranteed.