Budget 2015-16: The revealed priorities

Prof E Bijoykumar Singh *

Assembly Building (component of Capitol Complex) at Chingmeirong, Imphal in 2013 :: Pix - Danial Chabungbam

A Government budget is a legal document that ispassed by the legislature and also approved by the President/ governor. It is an annual financial statement of estimated receipts and expenditures of the Governmentin respect of each financial year. The distribution of expenditure across different departments indicates the priority of the government.

Proposals under five year plans get teeth only after provisions are made in budgets. Normally a budget for the next financial year is presented in the last part of the current financial year. In March, 2015 our CM who also holds the finance portfolio had presented a vote on account budget for 2015-16 as usual due to uncertainties in fund flow from the centre. This year this question is more serious because of the beginning of the devolution under the XIV Finance commission and the establishment of NITI Aayog for the simple reason that the proportion of internally mobilised resources has always been very low in Manipur.

Then, there is also the issue of special category status. What has been gained by higher share of states in shareable taxes has been more than neutralised by the withdrawal of special category status. The vote on Account allows the government to draw from the consolidated fund only for the first four months of the financial year. That is why every June/July the state Assembly has to discuss and pass a full budget again to get the approval for expenses for the remaining months of the year.

In March 2015 when the vote on account for 2015-16 was passed our expenditure was set at Rs 10702.4 crore with Rs 4933.10 crore for state plan, Rs 251.85 crore for Centrally Sponsored Schemes/Central Plan Schemes and Rs 5517.46 crores for non plan. Plan expenditure is associated with productive expenditure, which increases the productive capacity of the economy. Non-plan revenue expenditure for a state is accounted for by interest payments, wage and salary payments to government employees, pensions, police, economic services in various sectors, other general services such as tax collection, social services.

The proportion of non plan revenue expenditure has been gradually rising due to the committed nature of expenditure heads like payment of interest on loans taken by the government and salary/wages for employees.

The government now intends to spend Rs 9728.61 crore in 2015-16 with Rs 3954.87 for state plan, Rs 197.43 crore for CSS/CPS/NEC and Rs 5576.30 crore for non plan. There is a downward revision in the size of state plan and CSS/CPS/NEC contribution. It also consists of a revenue component of Rs 8038.27 cr and a capital component of Rs 1690.33 cr. Any expenditure that doesn’t involve creation of assets is treated as revenue expenditure. Salaries, subsidies and interest payments are examples of revenue expenditure.

Capital Expenditure is expenditure incurred for the purpose of creation of permanent assets or reduction of recurring liabilities. Out of this Rs 892.51 crore is Charged expenditure which means they need not be discussed in the Assembly and can be drawn from the consolidated fund. The items in charged expenditure at state level are related with governor’s office, MPSC, High court, assembly Speaker’s office, interest payment and debt services.

We have to pay interest on market loan, special securities issued to NSSF of the central government, interest on loans from autonomous or statutory organisation such as LIC,HUDCO,NABARD etc. Rs 3.97 crores have been set aside for the Governor. This is an entirely ‘charged expenditure ‘without any room for discussion even in assembly.

However, there is room for discussion on the remaining Rs 8835.65 crore when demands for grants are discussed in the assembly. There are many ways to impart some sense of accountability in expenditure through various standing committees of the assembly and cut motions. The quality of debate in the Assembly at this stage will reflect the seriousness of our legislators. This is an opportunity where our legislators can make significant contribution to ensure that leakages are plugged.

It is one instance where one needs to rise above politics by offering constructive suggestions to the house. Unfortunately most of our expenditure heads are notorious for the missing multiplier effect.

The top 10 priorities of the government as shown by the budgetary allocations are as follows: Education, police, Finance, community development, PWD, Power, MAHUD, Tribal affairs, hills and scheduled castes development, General economic services and planning and IFCD. Out of Rs 9728.16 crore Education has a share of 12.3% followed by Police at 10.92%. Finance has 10.45% followed by Community and rural development with 6.98%.Rs 463.83 crore will be spent in paying the interest on loans incurred by the state government. Interest payment & debt services accounts for 8.9% of total expenditure.

Low levels of education and skill deficit are responsible for low income levels of a large majority of the labour force, thereby perpetuating inequality. Consequently, the government’s thrust on skill development as well as ‘Make in India’ aims at improving employability and generating employment avenues. That explains the priority of education in government expenditure. Education sector is going to be overhauled in the next few years if the proposed changes are implemented. Business as usual approach is going to give way to professional management of education.

In this scheme education of teachers at school level plays an important role. The share of expenditure in hills is 19.5%. The share of hills in non plan expenditure in education works out to 28% while that of plan expenditure is only 4.9%. Of the many new schemes for education the provision of Rs 6.56 crore for the establishment of a Ramakrishna Mission School stands out as a bold and innovative step towards quality education.

Ramakrishna Mission schools across the country are known for their contribution to education. In the north east Arunachalpradesh, Meghalaya and Tripura already have institutions run by the monks of Ramakrishna order with their headquarter in Belur Math, Kolkata. DMCTE gets Rs 1.44 crwith 99% earmarked for salary only. The approved intake of 250 B.Ed. students alone will need 40 regular lecturers to meet the requirements of National Council of Teacher Education regulation 2014.

NCTE insists that the teachers should be regular teachers.With an average monthly salary of Rs 40000 per head the college will need Rs1.92crore this year for salary alone. The faculty have to be in place by 31 Oct. 2015. The additional expenses forfaculty and additional infrastructure have been provided for in the budget.

In the case of police 21% of the budgetary allocation of Rs 1057 crore are earmarked for the hill districts. The non plan allocation for district police is Rs 390.85 crore. Out of this Imphal west with 30.89% has the highest share and it is even larger than all hill districts taken together ( 27.27%). There is a provision of Rs 18.48 crore for Manipur police Training centre at Pangei for education and training of police personnel.There is a provision of Rs60.21crore for VDF. Thoubal has the highest allocation for VDF. The valley districts taken together have 78% of the allocation. The VDF as an institution is an indicator of many social malaises and ignoring the signals will be very costly for us.

There are other sectors which deserve higher allocation such as tourism and Commerce & Industry. Tourism gets Rs 46.39 crore. Commerce &Industry gets Rs 87.29 crore. These two sectors should have been given more considering the fact that we are talking of Act East and Make in India and tourism has emerged as an industry where we have significant comparative advantage yet tourism gets even less than the allocation of Rs 48.55 crore for the state legislature. Neighbours like Sikkim, Nepal and Bhutan have carved their place in tourism industry. One, however, cannot ignore our capability for absorbing the expenditure due to our lack of preparedness not only in these sectors but also in other areas.

The question about the effect of such priorities can be meaningfully answered when we persist in such policies.There is a general feeling that policies are going to change much faster than before and may even be reversed the implementation of GST and pay commission recommendation will have to be factored in. It is an interesting time and every metric is being revised. That makes it more difficult to say whether we are on the right tract.