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Haryana govt paints a rosy picture of state economy

Veiled facts: Reduction in UDAY grant, power subsidy helps Haryana bring down revenue deficit; increase in GST receipts also a major factor

india Updated: Mar 10, 2018 11:27 IST
Hitender Rao
Hitender Rao
Hindustan Times, Chandigarh
Haryana govt,state economy,Haryana budget
Haryana finance minister Capt Abhimanyu presenting the state budget for 2018-19 in the state assembly in Chandigarh on Friday. Chief minister Manohar Lal Khattar is also seen in the picture.(HT Photo)

The fourth budget of the first-ever BJP government in Haryana, presented on Friday in the state assembly, sought to paint a rosy picture of the state’s fiscal prudence in reversing the upward trend for revenue deficit.

Revenue deficit is the gap between the revenue earned and spent or the excess of revenue expenditure over the revenue receipts.

Finance minister Capt Abhimanyu in his budget address not only promised to reduce the revenue deficit to about 1.2% of the gross state domestic product (GSDP) in 2018-19, but also bring it close to zero by 2019-20 end.

However, there were a few veiled but critical aspects which contributed to his success story.

The untold story

The BJP government has got help in bringing down the revenue expenditure in 2017-18 revised estimates due to Rs 2,521 crore reduction in the grant paid to state power distribution companies under the Ujwal Discom Assurance Yojana (UDAY). UDAY was introduced by the Centre for bringing financial turnaround and revival of power distribution companies by taking over their debt.

While the financial grant under UDAY was factored in when the FM had presented the 2017-18 budget estimates, the Rs 2521 crore cutback which reflected in 2017-18 revised estimates has not only helped contain the revenue expenditure for the ongoing fiscal but will have a ripple effect for 2018-19.

However, when asked at a press briefing whether any of the revenue deficit statistics for 2017-18 budget and revised estimates excluded the UDAY impact, the finance minister replied in the negative.

Reduction in power subsidy

The reduction of Rs 1123 crore in the rural electrification (RE) subsidy bill in 2018-19 estimates has further helped the government bridge the gap.

The state government has pegged the rural electrification subsidy at about Rs 6,478 crore in 2018-19 budget estimates as compared to Rs 7,600 crore it spent as subsidy in 2017-18. It is quite unlikely that the reduction in the subsidy will stay through the year as past experience has shown that the power subsidy bill increases significantly through the year.

The FM also proposed to raise Rs 1,000 crore of additional receipts in 2018-19 by monetising unutilised government land and properties in and outside the state. Capt Abhimanyu said the government has identified about 2,400 government properties so far.

Increase in GST receipts

A major factor in bridging the gap between the revenue receipts and the expenditure is earnings of Rs 12,520 crore as the State Goods and Services Tax (SGST) receipts in 2017-18.

The state government expects an idealistic 90% increase in SGST resulting in earnings of Rs 23,760 crore in 2018-19 estimates.

In fact, budget statistics presented on Friday by Capt Abhimanyu, who also holds the excise and taxation portfolio, indicated Rs 14,922 crore increase in the tax revenue for 2018-19, the bulk of it coming from Rs 10,140 crore from the SGST.

The government also expects an increase of Rs 500 crore in the non-tax revenue receipts on account of grant of colonisation licences, renewal fee, conversion charges and composition fee earned from the real estate developers.

Other highlights
  • Asset management cell to identify govt land/properties in and outside the state. The govt will raise Rs1,000 crore from these properties in 2018-19.
  • The govt has decided that all departments and public sector undertakings will be allowed to operate only 1 or 2 major bank accounts from April, 2018.
  • Classes in National Law University, Sonepat, to start in 2018-19.
  • Food processing Policy 2018 on the anvil.
  • VAT on natural gas used by industry reduced from 12.5% to 6%.
  • Proposal to establish 20 govt ITIs and upgrade 22 govt ITIs in state.
  • To promote paddy straw-based projects to combat stubble burning problem.

FM’S candid admission

The FM was candid when he said except the revenue deficit, the state government has been able to keep all fiscal parameters within the limits prescribed by the 14thfinance commission and under the Fiscal Responsibility And Management (FRBM) Act.

The budget outlay

The FM announced about 12% increase in the 2018-19 budget outlay over 2017-18 estimates. However, the fresh outlay comprised 74 % as revenue expenditure and 26% as capital expenditure. He also announced a 34% increase in the capital expenditure in 2018-19.

No increase in taxes

The minister said that he does not intend to propose any increase in the present rates of taxes under value added tax (VAT) or introduce a new tax. “In order to provide relief to industries using natural gas for manufacturing, I propose to reduce the rate of VAT on sale of natural gas from 12.5 % to 6%,’’ he said.

First Published: Mar 10, 2018 11:22 IST