How populist schemes have drained state’s treasury

Populist schemes such as the Ladki Bahin Yojana and other unbudgeted spends are costing over 12% of the estimated revenue receipts

MUMBAI: Government contractors’ indefinite stop-work stance in protest of unpaid dues amounting to over ₹90,000 crore, in the current financial year, has exposed the state’s depleted treasury; and it is believed that the situation is set to become bleaker, with officials in the government stating that the budgeted expenditure is likely to drop further by 5-10%.

How populist schemes have drained state’s treasury

The treasury is in a bind, they say, thanks to populist schemes such as the Ladki Bahin Yojana ( ₹33,500 crore), floated before the Assembly election last year, and other unbudgeted spends, such as ₹25,000 crore spent on Annapurna yojana, through which over 10 lakh households receive three free cooking gas cylinders each year. Other doles include stipend for the unemployed youth and free pilgrimage for elderly citizens.

People in the know say, these schemes are costing over 12% of the estimated revenue receipts of ₹4.99 lakh crore. Apart from this, 58.5% of that is spent on salary, pension and interest on loan, which are committed expenditure.

Impact of cash crunch

An official from the finance department said, “This clearly means the government has to compromise on the budgetary allocation of ₹1.92 lakh crore meant for the scheme and development works, to enable spending on committed expenditure. The burden of the recently announced schemes is leaning heavy on the purse allocated to pay contractors engaged in various infrastructure projects.”

Another retired officer from the department said while every year the state spends up to 85-90% of its budget, “this time it is expected to drop to less than 80%, with the exorbitant addition of ₹1.30 lakh crore in the expenditure towards auxiliaries”.

This state of affairs has resulted in poor spending in essential sectors such as education and public health. A PIL in the Bombay high court (HC) by an NGO working in the public health sector, Jan Arogya Abhiyan, underlines that the government has spent only 7.25% of the budgetary allocation in the current fiscal year on public healthcare.

Advocate Lara Jesani, representing the NGO, said, “We petitioned to the HC to call attention on the poor public healthcare system which is in need of improvement. While the government had spent just 7.25% of the budgetary allocation on medicines and medical supplies, in some districts as many as 80% of doctors’ posts are still vacant.”

Rupesh Keer, a member of Samarthan, an NGO that studies state budget, said “The expenditure of the budget is expected to drop to 70% this year. The recent CAG report has slammed the government for not constructing 433 sub district hospitals. The unpaid wages of EGS labourers in Amravati amount to ₹40 crore and Palghar ₹38 crore, as funds have not been released.”

He also pointed to the fact that the government has been unable to release grants meant for housing schemes sponsored by the Centre PM Awas Yojana. “All this, thanks to irrational spending on populist schemes.”

“The revenue expenditure declared in budget was ₹5,19,514 crore – considering the size, the allocation of ₹18,165 crore for all 36 districts in the annual plan was rather small. And yet we have received only 60% of the amount approved; earlier, the government used to credit 100% of district annual plan funds by the end of December,” said an officer from the finance department.

Another officer from the department added that the unpaid bills of the contractors is large because much of the funds were spent on projects not approved by the finance department. “Ahead of the elections last year, some ministers had green-lit projects without the finance department’s approval. The payment of such projects is not the responsibility of the government,” he said.