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Budget session & Budgeting of Manipur (2006-07)
— Five key concerns of Manipur —
By:- Professor Mohendro Singh N *



As a democratic tradition and financial necessity every Government has constitutional obligation to take stock of past performance, indicate the outlines of the policy initiatives and present future course of action keeping in view the competitive strength of the economy and also distributive justice. The developed societies have developed fiscal discipline and they do hardly compromise fiscal obligation.

Budget is a comprehensive Master Document carefully designed to highlight objectives, priority and direction of the economic rearrangement - for which a number of exhaustive optimization exercises, evaluation - studies, analysis of critical options including Resource-Plan and Reform-Plan are normally undertaken.

A good budget captures the abject realities and speaks of the crux of the problem. A good budget is highly sensitive to the felt-needs, course of change and new temptations of the society. A good budget hardly goes by the beaten track.

It is, as such, a very powerful instrument to initiate a perceptible trend of development. It is not necessarily restricted to a mere statement of income and expenditure. It goes much beyond classical frontiers. Perhaps the most important commitment of the budget is "Sensitiza-tion of the vision". We cannot and should not have budget of Manipur without clear-cut vision. In other words, budget should indicate "where we are now" ,"where to go" and "how to go".

Reference may be made to the two commendable steps taken by the Government of India for preparation of (a) Zero base budget and (b) Outcome budget. It is a right step to make best use of available resources, to identify the grey areas and to ensure better performance. Above all, it will go a long way in reducing corruption of inefficiency and other leakages.

Now let us come to the Budget, 2006-2007, of Manipur. Well, Manipur, for the reasons known to themselves, is silent on the preparation of Zero-base-budget and Outcome budget. However, a few concerns are immediately before us.

Concern No 1: Semi-Stagnant-Economy

The first question is whether the performance of the State economy has registered the growth rate fixed by the Planning Commission of India? The annual average growth rate of industry is expected to be 8.33 percent during the period of Tenth Five Year Plan, while that of agriculture should be 3.59 percent and that of service sector 7.39 per cent.

It appears that no study has been so far sponsored and undertaken by the Government of Manipur. In fact what is highly imperative is a fresh and new picture of the State economy. The so-called routine compendium of departmental proposals prepared based on "notes and comments" in the files may not be able to capture the realities.

This old and outdated practice may fail to identify the strategic and critical path of break-through in this age of cut-throat competition of globalization. The State economy remains "agrarian", "rural", "unorganized" and "highly-rent-seeking" visibly vitiated by a new culture of unjustified costs, unjustified risks and unjustified barriers to competition.

We remain wedded to the primary activities. The big manufacturing industries have been closed and the small ones are getting crippled. The Budget, 2006-2007 of Manipur should address this issue. The Net State Domestic Product of Manipur was, at current prices, estimated at:

2001-02 : Rs. 3344 Crore
2002-03 : Rs. 3678 Crore
2003-04 : Rs. 4062 Crore
(Source: GOM. PIg Dept.)


Concern no. 2: Alarming Growth of Marginal Worker

One very disturbing phenomenon is spectacular rise in the population of marginal workers during the last one decade. The population of marginal workers has increased from 66,621 in 1991 to 2,85,849 in 2001 in Manipur. Annually it increases by 33 per cent. The female marginal workers account for 67 percent. We have to provide necessary infrastructures and opportunities for a decent earning and living.

Of course, the National Rural Employment Guarantee Act, 2005, has been launched to provide legal guarantee to work for 100 days a year. But only Tamenglong is going to benefit from the national intervention while there are equally marginal and poor districts both in the valley and hills. As such this calls for a State Policy to tackle the alarming phenomenon. We have to work out a new integrated policy comprising - (a) Opportunity, (b) Security and (c) Empowerment.

Concern no. 3 : Unemployment

Rising unemployment is, perhaps, the third concern. The budget, 2006 - 07 of Manipur, as a matter of immediate necessity, is expected to have a meaningful separate chapter on "Employment Perspective". To-day Manipur is facing a very uneasy problem of unemployment of 5 lakhs accounting for 21.74 percent of the total population, fairly high with demoralising effects on all fronts. Dependency is bound to be intensified with negative effect on savings and investment.

Now budget should highlight the possible rate of sectoral absorption so that in due course, say by 2020 we may expect a rosy picture of full employment. Without any convincing Long Term Perspective Approach the small open economy of Manipur cannot enjoy a sigh of relief. As such one does not see any sense of making a blind compromise on this key concern.

Another side of the coin is equally disturbing. The rising phenomenon of flight of better human capital from Manipur may burn the two ends of the candle: (a) Fall in competitive production and (b) Fall in the creation of additional jobs. The fate of Manipur should not be left to the "unorganized sector of half hearted private initiatives".

Credit-creation is not necessarily confidence-creation. Employment is basically a function of competitive employability and better organisation of responsive hierarchy of markets. Ironically, Manipur has many works to be done; but few jobs. Why not we embark upon a bold step for "Economic Zones" with a sound "security connectivity" .

Concern no. 4: Low flow of investment

The budget, 2006-2007 of Manipur should examine thoroughly the issue of decreasing flow of investment. It may be recalled in this connection that in 2001-02 the per capita public and private investment of Manipur was notoriously low. It was only Rs. 5053 as agai-nst Rs. 1,22,628 of Sikkim and Rs.56,055 of Gao. The future is really given.

Concern No 5 : Fiscal Reliance

One of the greatest headaches of Manipur has been the nightmare of fiscal reliance. Even 55 years of economic planning in the State our own revenue hardly accounts for 8 per cent of the total committed revenue expenditure while it is 77.62 per cent in Haryana and 73.97 per cent in Goa. Now we have to convince ourselves with a hard fact that we cannot meet even our routine requirements to the extent of 90 per cent with our own resources.

Sufficiently large amount of money from different sources has been spent on the creation and expansion of so called "capital assets" during the last five decades. Even down-sizing of manpower has been very painfully resorted to. Very unfortunately our own-tax-revenue remains fairly low. Own-tax-GSDP-Ratio is only 1.67 in 2003-04 whereas fiscal liabilities/GSDP is 61 per cent. Fiscal deficit is more than Rs. 350 crore a year.

One admits the fact that there is reinforcing relationship between revenue expenditure and capital expenditure. But without increasing capital assets in large measure, how can one multiply revenue expenditure? Prolonged application of high dose of revenue expenditure is bound to erode and erupt the efficacy of capital contribution.

All along the percentage of Revenue Expenditure to Total Expenditure has been 86 as against 14 of Capital Expenditure. Fiscal reliance depends both on mode of revenue collection and sound expenditure management. The problem of Manipur very much lies in expenditure management.

Let us make a fresh assessment of the so-called "asset creation". We need an impartial exercise, a deep introspection and a very fair evaluation of "Ground Realities" in concrete terms. The visible sub-standard of public goods and services speaks volumes. The rising nexus between ‘men in position’ and people in rent seeking world may in the long run be very costly. The unjustified threat should not be allowed to be a critical input of administration.

To-day Manipur needs a new mechanism to deliver genuine developmental roots and real distributive justice. One possible option could certainly be "sweeping and sustained" democratic decentralisation of economic planning and development. Let us see the performance of Panchayat Raj Institutions. Too much centralisation breeds both "inefficiency and corruption" and threatens to destroy the seeds of human assertion and social conscience.

I feel - perhaps, every sensible citizen in Manipur feels that for the first time Manipur will witness "real discussion" on Critical Development Concerns of the state during Budget Session, 2007-07. How long the small open econ-omy of Manipur should be left to be thoroughly exha-usted by these deep root-ed concerns? Let us expect a convincing answer to this question during Budget Session, 2006-07.

Table-1

Period Male Female Total
1981 6200 34,269 40,469
1991 9958 56,663 66,621
2001 96,989 1,88,860 2,85,849
(Source: - GOM: Dept. of Eco/Statistics:-Statistical Abstracts)

Table-2

Per capita flows to States (2001-02)
States Per Capita Plan Per Capita Public
Outlay (Rs.) and Private Investment
Sikkim 5550 1,22,628
Goa 3422 56,055
Gujarat 1284 33,875
Andhra Pradesh 1032 21,447
Manipur 1476 5053
(Source: Planning Commission)

Table-3

Index of Fiscal Reliance
(Average: 2001-02 to 2002-03)
State Own Tax Revenue/ Total Revenue Expenditure
Haryana 77.62 %
Gao 73.97 %
Maharastra 67.50 %
Tamil Nadu 64.60 %
Karnataka 61.52 %
Manipur 7.49 %
(Source: Twelfth Finance Commission. Report; Annexure 7.10)

Table - 4

Quality of Expenditure, Manipur (Percentage to total Expenditure)
1999-2000 2003-2004
Plan Expenditure 36.16 25.18
Capital Expenditure 21.26 14.08
Developmental Expenditure 67.11 62.73
(Source :- CAG, Report, 2004, P-12)


* Professor Mohendro Singh N wrote this article for The Sangai Express
This article was webcasted on 22nd February 2006.

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