Presenting a revenue surplus budget of Rs 3509.81 crore for the year 2016-17 in the assembly on Friday, MP finance minister Jayant Malaiya didn’t provide any major relief to people- at least to the middle class- while trying to tap newer sources of revenue. The budget saw taxes on articles not taxed till now and new options for borrowing meant to tide over the problem of rising expenses.
Budget doesn’t identify any thrust areas for the govt
The budget also does not identify any thrust areas for the state government with most departments getting an average enhancement of 10-20% in their outlays with some even witnessing a reduction.
Right at the outset, FM Jayant Malaiya mentioned the economic downturn being witnessed around the world and the challenges that would be felt as a consequence of it in the state.
State seeks Centre’s nod to borrow more from market
In an important development the FM announced, the state government has decided to seek the union government’s permission to increase its fiscal deficit limit as a percentage of gross state domestic product (GSDP) in the coming year. In real terms this means that the state government would be in a position to borrow more money from the market.
In 2015-16, the fiscal deficit as a percentage of GSDP was capped at 2.99% which was lower than the 3% allowed under the fiscal responsibility and budget management (FRBM) act. In 2016-17, the fiscal deficit of the state government is estimated at Rs 24,913 crore which is 3.49% of the GSDP. After an amendment in the FRBM, states with good financial record can enhance this percentage up to 3.5% of the GSDP.
The total expenditure in the budget stands at Rs 1,58,713.04 crore which includes revenue expenditure of Rs 1,22,585.33 crore and capital expenditure of Rs 36,127.71 crore. The total expenditure is about 20% more than the revised estimates of 2015-16 which stand at Rs 1,32,647.45 crore.
In the 2016-17 budget, total receipts stand at Rs 1,58,594.48 crore which include Rs 1,26,095.14 crore as revenue receipts and Rs 32,499.34 crore as capital receipts. The total receipts are also 20% more than the revised receipts of 2015-16 which stand at Rs Rs 1,32,413.40 crore.
The difference between receipts and expenditure in budget 2016-17 stands at Rs 118 crore and the appropriation amount stands at Rs 1,70,753.99 crore.
6% tax on goods purchased through e-commerce
In a decision that would affect many middle class people, the FM gave into a key demand of local traders and created a revenue source for the government by introducing a 6% tax on goods purchased through e commerce. Other articles that would be dearer include plastic cups, plates and bags on which VAT has been hiked from 5 to 14%, gas geysers, mirrors, bicycles above Rs 10,000. The government has reduced tax from 15 to 14% on trucks with a capacity above 12 tonnes and cars for defence personnel purchased through military canteen would attract VAT of 4 % as against 15%.
In order to promote inter caste marriages between SC and general people, government has hiked incentive amount from Rs 50,000 to Rs 2 lakh.
This was FM Jayant Malaiya’s 3rd budget and the BJP government’s 13th. The FM’s wife and BJP leader Sudha Malaiya was present in the visitors gallery during budget presentation. When the FM commenced his speech at 10.30 AM, attendance in the House was however thinner than usual in both treasury and opposition benches.
The FM surprised many by not resorting to couplets while delivering the budget speech, something he and his predecessor Raghavji had done while presenting the budget in the past.
Congress MLAs protested at certain departments being ignored in the speech and also that no announcement was made for enhancement of MLA local area funds.