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Bihar budget focuses on social spending, spares tax hike

Bihar finance minister Abdul Bari Siddiqui attributed the absence of fresh taxes on the impending introduction of goods and service tax (GST), tentatively from July, insisting that it was not prudent to tinker with VAT rates when they were about to be phased out.

india Updated: Feb 27, 2017 21:12 IST
Anirban Guha Roy/ Anil Kumar
Anirban Guha Roy/ Anil Kumar
Hindustan Times, Patna
Bihar budget,Fiscal,Abdul Bari Siddiqui
Bihar finance minister Abdul Bari Siddiqui arrives at the state assembly to present the budget for 2017-18. (Santosh Kumar/ HT photo)

PATNA: The Bihar government proposed no fresh taxes while presenting a Rs 14,555-crore revenue surplus budget on Monday, which envisages an expenditure of Rs 1.60 lakh crore in the fiscal 2017-18. Education and minority welfare have got higher allocations with an increase by Rs 15,389 crore, over and above Rs 1.44 lakh crore in 2016-17.

State finance minister Abdul Bari Siddiqui, after delivering a 20-minute budget speech in the Bihar assembly, looked upbeat over the state’s fiscal health, saying it was in “good shape” and that the fiscal deficit, at 2.87% of the total GSDP of Rs 6.32 lakh crore, was well within the Fiscal Responsibility and Budget Management (FRBM) limit of 3%.

Siddiqui attributed the absence of fresh taxes on the impending introduction of goods and service tax (GST), tentatively from July, insisting that it was not prudent to tinker with VAT rates when the same were about to be phased out.

“We have survived many economic upheavals but our fiscal health is in good shape. We are committed to implement all the seven resolves of the government, some of which are already off the ground, and adequate budgetary provisions have been made to departments concerned,” he said.

  • State budget size stands at Rs 160085 crore for 2017-18, an increase of Rs 15389 crore over fiscal 2016-17
  • No fresh taxes imposed by the state government. Finance minister Abdul Bari Siddiqui attributes it to the expected GST roll out
  • State fiscal health robust with a revenue surplus projected at Rs 14555 crore during 2017-18, 2.30% of GSDP
  • Social sector allocations top with 36.54% of the total budget outlay. Minority welfare gets threefold hike in outlay.
  • #Tax fall from prohibition neutralised by rise in revenue from sale of sweets, milk, garments, eateries and hotels.
  • Budget component classified as commitment expenditure and annual scheme in place of non-plan and plan heads.

In his budget speech, Siddiqui also announced the implementation of a housing scheme for fourth grade government employees and threefold increase in the budget allocation for the purpose at Rs 873 crore.

“We would have dreamed bigger had the Centre kept its promise of giving a Rs 1.25 lakh crore special package to Bihar and not tweaked the funding pattern. It would have been better still had the central tax collection not taken a hit, post demonetisation,” he added.

But the finance minister was at pains to insist that the state was well positioned to mobilise adequate internal resources, despite the adverse impact of prohibition, stating that excise duty generated in 2015-16 was only Rs 3,141 crore.

“The losses have been offset by buoyancy in other sector like sweets, ready-made garments, dairy and hospitality sector,” the finance minister said.

However, the collections till date showed that Rs 22,000 crore had been received, with principal secretary finance Ravi Mittal asserting that the state hoped to generate Rs 27,896 crore by end of the fiscal. “Next year’s internal tax target has been fixed at Rs 32,001 crore, a hike of Rs 2,270 crore,” Mittal said.

For the first time, the two components of the budget, plan and non-plan, have been classified as annual scheme and establishment and commitment expenditure been integrated with it on the pattern of the Union budget.

Going by figures, Rs 78,818 crore has been allocated for establishment and commitment expenditure (non–plan), registering an increase of Rs 6,541 crore, whereas Rs 80,891 crore has been provisioned for annual scheme outlay (plan) for expenditure on development activities.

The scheme outlay has seen a rise of Rs 9,389 crore from the current fiscal.

Among prominent sectors, education tops the list with the allocation pegged at Rs 14,217 crore,of the total outlay, followed by rural development with an allocation of Rs 9,725 crore, rural works ( Rs 8,516 crore), energy ( Rs 6,795 crore), social welfare (Rs 5,949 crore), road construction (Rs 5,703 crore), health (3,567 crore) and urban development (Rs 2,734 crore).

Bihar’s debt management seemed to be in control as its total debt, including liability, stood at 1.47 lakh crore in 2017-18, which is 23% of the GSDP. The state plans to borrow Rs 23,862 crore in the coming fiscal and expects a share of Rs 65,326 crore in central taxes and Rs 36,956 crore in the form of grants-in-aid.

First Published: Feb 27, 2017 21:12 IST