TODAY -

What does Union Budget, 2024-25 mean for Manipur ?

Oinam Nabakishore Singh *



Budget means different things to different people across States and economic classes of the country. Its implication are different for different individuals, professions, business establishments. The budget of 2024-25 proposes more pronounced financial assistance from the Union Government to two States-Bihar and Andhra Pradesh.

While Bihar and Andhra Pradesh found place of pride in the Budget Speech of the Union Finance Minister, Ms Nirmala Sitharaman, many other States including Manipur did miss the attention of the latter. The Opposition leaders are quick to point out the obvious importance given, and handsome outlay proposed for the two States by using rhetoric-the Budget is to save the chair of NDA Government at the Centre.

On the other hand, people of Manipur have little time to think about political maneuvering and drama at Delhi. Rather, they, especially those at the lower rung of the society, would be more concerned with roji- roti (livelihood) - whether the Union Budget makes it easier for them to make both ends meet.

Opposition political parties in Manipur wondered as to why the trouble torn Manipur and its need for reconstruction and rehabilitation after the conflict failed to catch the attention of Union Government.

While some other flood affected States like Assam, Uttrakhand, Sikkim, Himachal Pradesh, etc. were to be provided with assistance by the Union Government as per speech of the Finance Minister, one wonders as to why a similarly affected Manipur was left out in the Budget Speech.

One may further ask if Manipur does not matter at all in the scheme of the Union Government. Being under tremendous stress and strain for the last fifteen months due to the unprecedented animosity and violence, which has turned the normal life upside down, people of Manipur expect the Union Government to, at least, remember it in the Parliament.

One would remember that the Hon’ble Prime Minister of India was made to speak on Manipur on the floor of the House on a few occasions under compulsion. Government employees form the bulk of income tax payers in Manipur. With ever increasing their salary following recommendations of Pay Commissions, more and more employees of both Government and private sector are in the income tax brackets now.

There are two reliefs for them in the Union Budget-increase in standard deduction from Rs 50,000 to Rs 75,000 and slight tweaking of income tax slab by replacing Rs 3 lakh to Rs 6 lakh slab by Rs 3 lakh to Rs. 7 lakh with tax burden of 5%, and subsequent increase of each slab by Rs 1 lakh. These changes will save the tax payers of Rs 17, 500 per annum. This saving will also be equally available to the pensioners.

However, when one takes the annual inflation rate of more than 10 percent in Manipur into account, the savings in income tax will be neutralized. This budget has also introduced some changes in capital gains from investments in stock, gold, bond, mutual funds, real estates and any other assets.

One major change is removal of indexation, which allows escalation in the cost of acquisition of the asset by taking inflation into account and allows determination of the gain in real terms.

Investors in real estate are also likely to end up paying more tax on the capital gains due to removal of indexation. The reduction in the rate of long term capital gain tax from 20 percent to 12.5 percent with removal of indexation is seen to result in more payment of tax by investors.

The negative sentiment to the proposed changes in capital gains tax is reflected in the fall in the index of stock markets in Mumbai. However, raising of exemption from capital gains upto Rs 1.25 lakh is welcome by small investors.

It is not clear as to how many people of Manipur will be affected by tax on capital gains from investment in stock market, gold, real estates. However, it is useful to appreciate the implications of capital gains and tax obligations to be tax compliant.

Even though there is no specific allocation for Manipur in the Union Budget, there will a good share for the State in terms of capital expenditures for roads, airports, railways, Central Universities, Regional Institute of Medical Sciences, National Sports University, etc. which are located in the State.

One will notice that a lot of construction activities are going on in the State under direct financing by the Centre. Such allocations have become routine as most of them are ongoing projects.

The plan to lay further railway line from the railway station at Imphal to Moreh and further linking India to Myanmar and other countries of the South-East Asia is expected to have been severely affected by the prevailing situation of uncertainty and unrest in Manipur. Survey for new greenfield railway line from Imphal to Moreh was completed and alignment too is believed to have been finalized.

However, further works for it will require allocation of fund the Central Government. One good source of funding for programmes and projects taken up in Manipur is Centrally Sponsored Schemes (CSS) and Central Sector schemes. Externally aided projects are also taken up in Manipur with assistance from the Central Government.

Being a special category State, Manipur is well placed to leverage its fund to access CSS of the Union Government. Just by providing its share of 10 percent of the project/scheme cost, Manipur is able to get 90 percent funding for all CSS schemes from Ministries of the Central Government.

There is no shortage of fund in the Central Ministries, where a pool of fund is earmarked to be spent in a financial year across the country. Whichever State Government prepares a scheme/programme in line with the guidelines of the CSS and submits early, the chances of such scheme/programme getting sanctioned is high. In fact CSS schemes can be good sources of funding for development works for a relatively poor State like Manipur.

To illustrate the point, I share my own experience of working in State Government of Manipur as Commissioner (MAHUD) in 2002-03. At that time, the State PWD was unable to construct a flyover in Imphal City because of lack of fund. MAHUD submitted a proposal to the Ministry of Urban Development of Union Government for financing the present BT Road flyover and the three Ima Market complexes at Khwairamband Bazar in 2002.

They were sanctioned with project cost of about Rs.70 crore in 2002-03 then, resulting in their construction. The State Government of Manipur has to be innovative and submit maximum number of projects to the Ministries of the Central Government under CSS.

The Union Government has made adequate allocation for social security programmes under National Food Security Act for free distribution of food grains to the poor and engagement of rural poor in job creation under Mahatma Gandhi National Rural Employment Generation Programme. Similarly, adequate funds are available for rural connectivity under Pradhan Mantri Gram Sarak Yojana.

In case the quality of work is improved under these scheme, there will be tangible and good infrastructure in the State, which will help spur economic activities and growth. The State Government machinery will do well not to lose any time to take full advantage of CSS of the Union Government.


* Oinam Nabakishore Singh IAS (Retd) wrote this article for The Sangai Express
This article was webcasted on 29 July 2024

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