Uttarakhand officials say budget making faces resource crunch
The Uttarakhand government is having a tough time generating resources for the budget to be tabled in the assembly by March 31 with the Centre pressuring it to augment revenue after having slashed funds considerably, sources in the finance department said.Updated: Feb 02, 2018 21:43 IST
The Uttarakhand government is having a tough time generating resources for the budget to be tabled in the assembly by March 31 with the Centre pressuring it to augment revenue after having slashed funds considerably, sources in the finance department said.
Officials preparing the 2018-19 budget said the resource crunch came after the Centre tightened the purse strings some two years ago in keeping with the recommendations of the 14th finance commission. The move followed the Narendra Modi government’s decision to replace the planning commission with Niti Ayog.
States like Uttarakhand were “completely dependent” on funds doled out by the planning commission for development. Niti Ayog, officials said, is a “mere counselling body that is mandated to suggest measures to the states to augment their revenue receipts.”
Finance minister Prakash Pant admitted that the state is under pressure to augment its revenue after the 14th finance commission recommendations came into effect. “We have started the process because the Centre winded up the two main heads under which we used to get central funds for different development projects”, he said, referring to the Special Plan Assistance (APA) and Normal Central Assistance (NCA).
He, however, added that the states’ share in the central taxes has increased from 32% to 42%. “The Centre has also started providing us funds in the 90:10 ratio for the centrally sponsored schemes being implemented in the state,” Pant said. Besides, some schemes like the Chardham all-weather road project and the Rishikesh-Karnprayag rail-line project “are fully funded by the Centre.”
Officials privy to the budget-making process said 10% increase in the states’ share in the central taxes and other central funds being “provided to us as compensation” have not benefited Uttarakhand much.
“The benefits that could have accrued to us have been offset by the Centre’s decision to stop the central assistance for various projects under the SPA and NCA,” said an official on anonymity.
Officials also cited “fiscal mismanagement and unrestrained revenue expenditure” as two other pressing factors coming in the way of resource mobilisation for the budget.
“A huge portion of the revenue expenditure of the state budget goes into meeting the establishment costs like employees’ salaries,” said a source in the finance department. “The expenditure also mounts because of unnecessary departments created in a small state like Uttarakhand,” he said.
“For instance, the social welfare department should have the minority department under it but it has been separated,” said another source in the department. As a result, he said, “the state government is facing a revenue deficit of Rs 3000 crore,” and it “has hardly any funds for the capital expenditures” for building infrastructures, which also boost growth. “Consequently”, he added, “the state economy is now heavily dependent on borrowings.”
Pant dubbed such opinions as mere conjectures. “Our non-plan (revenue) expenditure is a bit on a higher side but that doesn’t mean that we are facing a financial crunch,” he said. “Similarly, our borrowings also are within the limit prescribed in the Fiscal Responsibility and Budget Management Act.”
Pant also denied that the government had no funds for capital expenditure. “Our capital expenditure so far comes to Rs 29,000 crore,” he said. “Besides, a process is on to carry out mergers of departments so as to rein in our revenue expenditure.”