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Budget likely to help rich states

business Updated: Mar 02, 2008 22:14 IST
KV Lakshmana
KV Lakshmana
Hindustan Times
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Enhanced expenditure on social sectors like education, health, old age pensions, and development projects and infrastructure definitely spells good news for the different States but experts say the positive impact may not be uniform with the richer states benefiting more.

Senior economist Amarnath of the National Institute of Public Finance and Policy says that increase in state’s share in education programme Sarva Shiksha Abhiyan will mean that only states that can shell out the increased share (35 per cent, from 25 per cent) stand to benefit more.

Although allocations have been hiked for the existing social sector and development schemes, no new ones have been announced, he added.

The increased allocations for social sector are mostly state subjects — including the bonanza for agriculture — and these will have a positive impact on states, felt Mahesh Purohit, former member secretary of empowered committee of the finance ministers and director, Foundation for Public Economy and Policy.

Some states expressed happiness over acceptance of long-pending demands, and people-oriented and well-meaning developmental projects.

Tamil Nadu’s major drinking project – desalination of seawater – has got a major push with an allotment of Rs 300 crore as the first installment. The creation of a new powerloom hub at Erode would give further fillip to the state’s textile industry. But, another major demand of the state — interlinking of peninsular rivers — does not find any mention.

Chattisgarh is miffed that one of the Ultra Mega Power Projects that the mineral-rich State gets may not be in accordance with its own Energy policy.

Orissa appeared happy with three important declarations in the budget speech — the lion’s share of the Rs 5,800 crore Backward Regions Grant Fund (BRGF) would go to Bihar, Orissa and Uttar Pradesh". Orissa also gets an Ultra Mega Power Project and so do Tamil Nadu, Maharashtra, Jharkhand and Karnataka.

Jharkhand is disappointed with Chidambaram failing to mention any special and separate allocation for countering Naxal menace in the State.

In Uttar Pradesh, the sentiment was that it has gained more by default rather than by design. Deepak Malik, chairman, UP State Council of Confederation of Indian Industry said, “It's like giving quinine to a malaria patient — but stopping short of the full dose.

The drought-hit farmers of Bundelkhand would hardly benefit. “It is the farmers of the well-irrigated Western UP who would (wrongly) benefit,” said Pushpendra of Gram Swaraj Prahari Praskhishan Sansthan, Banda. Moreover, because of the five-acre cap, Bundelkhand farmers would not benefit as farmers here own larger tracts.

The BJP-ruled Madhya Pradesh was unhappy as it felt the mirco, small scale and medium industries were not given any relief or incentives.

Gujarat too felt there was nothing special for the state. Since Gujarat’s development is port-led, some schemes for ship-building and port development would have helped the state, said Gujarat Chamber of Commerce and Industry (GCCI) president Paru Jaykrishna.

In Kerala, the industry and business bodies gave a thumbs up to the budget, but the left leaders were quite guarded. State finance minister Thomas Issac, an economist, has lauded the loan waiver plan but he said it was an admission of the failure of the agricultural policies of the union government. “It is a populist budget aimed at the next election,” he said. Chief Minister VS Achuthanandan has also hailed the debt relief package.

West Bengal felt the budget was not generous to the State, and also had no significant east-specific announcements, despite the UPA government’s announcement of the “look East” policy right after coming to power.

In Haryana, the state government first gave conditional waiver to their electricity dues and interest on cooperative loans. Now, the Union loan waiver. Little wonder that the farmers are grinning ear-to-ear.

(With inputs from Ezaj Kaiser, Soumyajit Patnaik, GC Shekhar, Akhay Kumar, Manish Chand Pandey, Pankaj Jaiswal, Debobrat Ghose, Rathin Das, Ramesh Babu, Jaidev Mazumdar and Navneet Sharma)