Haryana finance minister Capt Abhimanyu will present the first budget of the Manohar Lal Khattar-led BJP government on Tuesday. As the BJP had come to power making grand promises, people are looking forward to the budget, which will also be the FM's first, despite the state government's attempt to ramp them expectations through the two 'white papers' on state finances.
Claiming that it had received a 'shattered economy', the BJP government had brought out the fiscal excesses of the previous regime. Nonetheless, there are several challenges before the new regime which is still trying to settle in the saddle. As he prepares to present his budgetary proposals, HT lists 5 key challenges the finance minister and his government will have to tackle in the budget:
Publicised as the 'Number 1' state in the country, Haryana did achieve annual average rate of growth of GSDP (Gross State Domestic Product) of 8.5% between 2000-01 and 2009-10. Not only Uttarakhand, Gujarat, Bihar, Tamil Nadu and Maharashtra did better than Haryana, its growth rate was also not stable, fluctuating between 5.5% and 11.72%. In the last four years, it has slumped to 6.99%. While tertiary or service sector did well, primary (agriculture and allied) and secondary (industry) sectors are areas of concern, reporting negative growth or growth rate lower than the national average in some years. The BJP, in its manifesto, promised to take the annual growth rate to 10%. Besides policy interventions and innovative strategies, the government will need to create conducive environment for growth of agriculture and industry
A monthly allowance of Rs 6,000 for Class 12 pass unemployed youth and Rs 9,000 to those with higher education, laptops for meritorious Class 10 & 12 students, Wi-Fi or broadband Internet connectivity in all towns and villages, pay and allowances to state employees on Punjab pattern, foodgrains to all poor families at Rs 1 per kg on MP pattern, free bus pass to all girl students and more. The list of BJP promises seems endless. As the government lacks the financial wiggle room, their implementation is a huge challenge. It's, therefore, no surprise that few in the saffron party want to discuss these poll promises. While the FM will be hard-pressed to find resources, he can surely try and make a beginning on a few of them.
Pointing to the "locational advantage" available to Haryana, a Punjab leader had 5-6 years ago remarked: "Take Gurgaon out of Haryana and the state will start looking like Bihar." While his statement is hyperbole, it is a fact there are huge regional disparities in the state in terms of both income levels of the people and development. As per official data available in white papers, Haryana may be among the few top states in terms of per capita income, but it is primarily coming from 6 districts. The other districts are trailing in terms of relative PCI due to the concentration of industry and growth in service sector in some parts on NCR only. Bulk of the development spending was also funneled to some select areas. The imbalance has led to a clear divide in terms of job opportunities, infrastructure, facilities etc. The new regime has promised equity.
A 'revenue surplus' state a decade ago, Haryana has become revenue deficit now, meaning that it does not have sufficient funds to meet its committed expenditure and meets the gaps through borrowings. With the state's debt and interest payments, the committed liabilities, including the salary and pension bill, have also jumped in recent years.
At the same time, the state's total revenue receipts haven't kept pace with the share of TRR as a percentage of GSDP declining from 11.6% in 20004-05 to 9.8% in 2013-14. The trend in the state's own tax revenue is not very different.
Not a happy scenario at all with so many lofty promises to meet. Though successive governments have avoided announcing new tax proposals in budgets, it is not clear whether Capt Abhimanyu would stick to the trend or bite the bullet.
The expenditure on creation of productive or long-term assets is a measure of the government's focus on infrastructure development and economic growth. In the past 10 years, the capital outlay has been showing fluctuation, registering an upward trend between 2005 and 2010. Thereafter, it started going due to uncontrolled growth in revenue expenditure on account of sops and freebies. The finance minister would have to try and find resources to raise the capital outlay if his government is serious about its promise of double-digit growth.
• Average annual rate of growth of GSDP (Gross State Domestic Product) has slumped to 6.99% in last four years from 8.5% between 2000-01 and 2009-10.
• Manufacturing sector reported a rate of growth lower than the national average in 6 of the last 10 years
• Primary sector's average growth rate better than the national average, but showed negative growth during 2005-06, 2007-08, 2009-10 and 2012-13
• Per Capita Income spread skewed with only 6 districts having PCI above the state average
• Unemployment rate of 5.1% in rural areas is higher than the all India average
• State's own tax revenue as a % of GSDP is down to 6.6.% in 2013-14 from 7.8% in 2004-05.