Chief minister Harish Rawat will have a tough time while presenting the 2016-17 annual budget in the assembly early next month, with scarce central funds and limited income lessening chances of growth.
Officials said, “As it is, preparing a state budget is a challenge. It becomes all the more acute when it is an election year…and that too when we are grappling with limited incomes and scarce central funds,” said finance secretary Amit Negi, who is overseeing the budget making process.
Speaking to HT on Sunday, Negi said separate financial provisions had to be made for all flagship welfare and development schemes announced by the chief minister.
“Those announcements pertain not just to a series of welfare schemes for different sections of society. They also relate to promotion of tourism and key sectors like agriculture and horticulture,” Negi said.
Refusing to clarify whether the budget will be deficit or surplus, Negi said it would be growth-oriented. “It will have special provisions for big-ticket schemes relating to roads, bridges, and irrigation etc. Critical infrastructures like schools and hospitals would also be part of the state’s annual financial statement.”
Sources, however said the 2016-17 budget will be deficit, like last year’s annual budget of Rs 36,000 crore.
“Our state is still going through a growth process. Therefore, we need a massive budgetary allocation to boost infrastructure development,” said a source in the finance department, adding that the state remains heavily dependent on borrowings from banks after central funds grew scarce since NDA’s coming to power.
“As per the Reserve Bank of India (RBI) stipulations, we are entitled to 3% of the state’s total Gross Domestic Product (GDP) related revenues. So, until the state achieves its growth potential, we will be forced to continue with deficit budget because such a provision gives a leeway for borrowings necessary for growth,” he told HT.
The source said the state’s revenue from the central sales tax (CST) had started dwindling amid reports of investors leaving the state. “Consequently, the state is left with only a few sources of revenue,” he said referring to Value Added Tax, excise duty, mining, and transportation taxes etc.