Towards Budget of new Government of Manipur 2022-23 with focus on productivity revolution and human capital formation

Mohendro Nandeibam *

Budget is one of the most powerful instruments to run a state. Economics normally comes into the centre-stage of politics. Because finance is the lubricant of all activities.

A developed society has developed fiscal discipline. If we want to know the standard of governance of a government, please look at the quality of budget presented by the Finance Minister who is normally an expert in the field of economic management. In any civilized society, budget means a “lot” – about performances, achievements, targets, weaknesses and direction.

All acts of production, distribution, consumption,investment and employment are subsequently induced or reduced. Fiscal policy mediates between “risks” and “opportunities”. Economic policy and fiscal policy are integral parts of a set. Normally a sensible government prepares and presents Growth-Mediated-Budgetary-Policy; - rather than a mere statement of income and expenditure.

The world has changed a lot with scientific achievements, technological advancements and information revolution; but Manipur remains fairly slow and weak to take fuller advantage of the sweeping changes, with the result that the state remains entangled with extensive disabilities of a captive world of mere survival without a defined spirit of global competition.

Even after 70 years of so-called economic planning in the country. Manipur has been a classic example of underdevelopment with mounting stagflation, unabated cost-disability, low human capital formation, unmet critical gaps, rural deceleration, rising population of marginal workers, alarming phenomenon of drug trade through Myanmar and Moreh, dragnet of policy paralysis and absence of good governance.

The small economy of the state looks seized. The challenge of Manipur Budget 2022-23 should now be to tackle the chronic issues facing the tottering state economy to-day.

Budget should look at the economy in its entirety as one unit. Budget should be critically sensitive to the new challenging forces and formations to put the course of the economy in the right track. A small mishap in one segment may derail the noble purpose of growth.

It has to take note of the past development experience, analyse present problems and decide the priority keeping in view the need for accelerated growth in near future in this age of cut-throat competition. We have to have a clear picture of distinction between performance and achievement.

Mere performance as an act of routine exercise at the cost of lasting achievement may be counter-productive and becomes a breeding ground of policy paralysis.

Financial budget; the outcome of ‘resource-plan and reform plan’ – should be finalised only when the state identifies the most promising area endowed with comparative advantage and potential to project and position the state as the best.

The changing objectives, priorities and direction should be made the hallmark of the master document. Budget is, in a way, an annual status report of the health of the economy with a reference to past experience, present problems and future target.

Now, what could be the possible thrust of objectives of Manipur Budget 2022-23 of the new government? Creation of a congenial atmosphere for the attraction of private investment should be No. 1. The issue of underinvestment in Manipur has to be tackled with organised participation of private investment.

Private investment is a major driver of demand, creates better capacity, increases labour productivity, introduces new technology, allows creative destruction and creates more jobs. For this we have to ensure perceptible improvement of Ease-of-Doing-Business.

Right now, Ease-of-Doing-Business Index of Manipur is extremely low with 32ndin national ranking according to the Department for Promotion of Industry and Internal Trade; Ease-of-Doing-Business Ranking, Government of India. We have to simplify registration procedures, streamline tax and credit structure, improve physical infrastructures including discipline of work force, facilitate land allotment, step up trade across borders and ensure proper law and order.

Very unfortunately, the percentage of reformation of Manipur was extremely low with 1.60% in 2019 as against 84.49% of Assam and 22% of Tripura. To-day Manipur has been categorised as ‘Slow Burner’, while Assam as ‘Role Model’ and Tripura ‘Mover’.

No.2: we have to initiate the Productivity Revolution of the farm sector to ensure food self-sufficiency within 3 years. We are too weak to manage the agriculture sector in a small state like Manipur. To-day we are net importer of almost all food grains. To bridge the demand-supply gap, paddy yield has to be stepped up by 25%. Now we have to face an additional problem of climate change.

There is apprehension that crop-yield may decline 9% between 2019 and 2039 due to climate change in the country.As such there is need for productivity revolution of 83% of land holdings accounted for by small and marginal farmers. To realise the national objective of doubling farmers’ income TOP should be on the top (T=Tomato, O=Onion and P=Potato). We have to prepare a road map to break all speed breakers.

The framework of agricultural policy should be tackling cost disabilities, diversification towards value-added production and efficient marketing infrastructure. Zone-wise agricultural planning based upon soil health and cropping character may be a better strategy. A new system of competitive production for import substitution is the need of the hour.

No. 3 is human capital formation. Accelerated development is not possible without three skills; such as cognitive skill, socio-behavioural skill and skill combination. The deficiency of natural resources can be compensated for by human resources. Japan is a case in point. So are Korea and Singapore. The changing nature of technology and work demands changing the character of human capital consisting of Knowledge, Skill and Health, which are equally important.

The productivity of India is low; because the Human Capital Index is fairly low with 0.44 as against 0.88 of Singapore and 0.84 each of Korea (Rep.) and Japan (World Development Report, 2019).

What Manipur Budget 2022-23 should take of is that education and training do not end in schools and they go far beyond vertically and horizontally. As such, the growth of human capital demands lifelong learning with a strong foundation.

We are, perhaps, too much too long with the traditional rut of conservative approach while the whole world has changed a lot. New policy announcement along with the presentation of normal features of fiscal deficit, revenue expenditure and capital expenditure could be a welcome initiative of the new government whether it is a Performance Budget or Activating Budget.