Manipur 2013-14 : Nothing bold or visionary
Prof Elangbam Bijoykumar Singh *
Assembly building at Capitol Complex, Chingmeirong, Imphal :: Pix - Bullu Raj
After the Union Finance Minister, it was the turn of the state Finance Minister to present the budget in the state Assembly. Our Finance Minister was not presenting the last budget of the Government nor was there any reason for being concerned with economic events around the world.
The second year of a third term is very different from a 5th year of a second term when the Midas touch also has evaporated. The Union Government is deftly moving among scam debris of gigantic proportions. We have nothing like that besides an opposition without any focus. Opposition in Manipur has a serious crisis of image and none can fire the imagination of people.
As I said earlier while commenting on the Union Budget last week, much of whatever happens here will be due to our own efforts. Our hope for having a bold and visionary budget remained unrealised. There were so many opportunities but over caution spoiled the game.
No doubt, it is intended to sustain Government finance during April-July 2013 yet one wish some concrete measures could have been there. Of the total Rs 9080 crore proposed to be spent during 2013-14, 45% are tentative depending on the plan financing scheme for 2013-14.That perhaps explains why there is so little enthusiasm among the public and even among the policy makers.
It is again a Vote on Account as the plan size for 2013-14 is yet to be finalised and as usual there is a promise to present the full Budget after the plan size is finalise.
The priorities in the ensuing fiscal year will be improvement of power transmission and distribution network, augmentation of drinking water supply and expansion of irrigation potential. The State Government is committed to prevent any rise in the non plan revenue expenditure and move towards fiscal consolidation. Non plan expenditure has been largely maintained. The Government has been cautious to ensure that expenditure does not overshoot Budget amount. Expenditure and release of funds have been staggered.
The Chief Minister who also holds the finance portfolio says: "The finances of the State are passing through an extremely critical and challenging phase…." The main reasons behind this difficult financial situation are, according to our Finance Minister, overwhelming need of Government investment across the State, need to fund the police establishment to tackle law and order situation and construction of physical, social and administrative infrastructure in areas under the Autonomous District Councils subsequent to devolution of power to them.
A budgeted fiscal deficit of Rs 756 crore with a budgeted revenue surplus of Rs 1232 crore means that Manipur Government is going to borrow Rs 756 cr for capital expenditure i.e. for construction . The revenue surplus is 9% of GSDP and the fiscal deficit 5.58% of GSDP. Revenue surplus (RE) higher than Revenue surplus (BE) and fiscal deficit (BE) higher than fiscal deficit (RE). we have managed to sustain an excess of current income over current expenditure and even managed to bring down the requirement of borrowing for capital expenses.
We no longer consume our entire revenue receipts. We can finance part of our development. Though we have achieved the revenue surplus as per the FRBM Act, our performance in the case of fiscal deficit has been erratic. It fell from 9.98% (actual) in 2011-12 to 0.7% in 2012-13 (RE) and again rose to 5.58% in 2013-4(BE).
The revenue expenditure is Rs 6825 crore and capital expenditure Rs 2155 crore (tentative). State's own tax revenue is estimated at Rs 492 crore with non tax receipts at Rs 430 crore. The State's share of Central tax is Rs 1569 crore in addition to non-plan grant of Rs 1447 crores from the Centre. Rs 610 crore constitutes charged expenditure meant for paying the salaries of constitutional positions, payment of interest on loans taken by the State and also compensation decreed by the court.
One cannot miss the lack of information in the Budget. I think this is the least transparent Budget in the last few years. FRBM Act is simply not maintaining a revenue surplus. One of the components of the FRBM Act, which I had the opportunity of developing for Manipur many years ago, is the need to present a detailed account of the performance of the economy. Such an account is not related with the tentative nature of plan size. While our success in maintaining a revenue surplus is largely dependent on central transfer of funds, I do not see any reason to try to go much below the mandatory 3% of fiscal deficit.
We are borrowing for productive investment and hence there should not be any apprehension unless of course we know the wastage of such expenditure. No new tax has been imposed nor is there any new measure for better tax collection. Much of what should have gone to the public exchequer has been diverted to personal accounts.
The issue of wastage invariably brings up the importance of the construction sector in the growth of this economy. This has resulted into a high growth of employment in this sector which is still unorganised. The growth of this sector and the growth of crorepatis are interrelated. The growth of an economy cannot be sustained by construction alone.
Of equal importance is the quality of such assets.
* Prof Elangbam Bijoykumar Singh wrote this article for Hueiyen Lanpao (English Edition)
The writer is at Department of Economics, Manipur University
This article was posted on March 07, 2013
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