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Budget 2018-19: Challenges ahead for Yogi government

The government will have to explore ways to mobilise additional resources to fund new schemes that it may announce ahead of 2019 LS polls

lucknow Updated: Sep 29, 2017 14:44 IST
Umesh Raghuvanshi
Umesh Raghuvanshi
Hindustan Times, Lucknow
Budget 2018-19,Yogi government,Challenges
UP government may have to drop some ‘useless’ schemes or cut wasteful expenditure to incorporate the new ones in the annual budget.(HT Photo)

More challenges stare the already financially strained Yogi Adityanath government in the face as it begins preparation for annual budget for 2018-2019, likely to be presented in the state legislature in February 2019.

As the annual budget (2018-2019) will provide an opportunity to Yogi Adityanath government to make some populist announcements ahead of 2019 Lok Sabha elections, it would have to explore ways to mobilise additional resources to fund any such new schemes.

The state government may have to drop some ‘useless’ schemes or cut wasteful expenditure to incorporate the new ones in the annual budget. Officers associated with budget preparation exercise remain tight-lipped on the issue but a government order (GO) issued by principal secretary finance Sanjiv Mittal (on September 27, 2017) gives sufficient indications about the prevailing mood.

“In items for new schemes, the proposals, mainly of externally aided schemes, centrally sponsored schemes and other resource linked schemes should be incorporated. For new schemes, instead of proposing creation of new posts other options should be considered….Proposals of departments (having 100 percent state government funded schemes) will be considered if they propose scrapping of ‘useless’ schemes,” reads the GO asking departments to send their proposals to be incorporated in the annual budget by November 30.

According to sources, the state government is already feeling the pressure of releasing a large chunk of funds for its crop loan waiver scheme that is expected to have put an additional burden of nearly Rs 36000 crore on the state exchequer. The state government had initially proposed to float ‘Kisan Relif Bonds’ to fund the loan waiver. Sources said the Reserve Bank of India refused to approve this move. So, the idea was shelved and the state government decided to fund the crop loan waiver from its own resources.

As the second phase of crop loan waiver scheme will begin in October 2017 the state government has deferred to December 2017 payment of seventh pay commission arrears of about Rs 20,000 crore to be paid to employees and pensioners. The government may have to defer payment of arrears further if it fails to mobilise additional resources to fund development projects in the coming months. “We have just begun preparations for annual budget for 2018-2019. It’s too early to say anything about availability of funds for new schemes in annual budget. We will cross the bridge when we get there,” said a senior officer on condition of anonymity.

A close scrutiny of state’s finances depicts a dismal scenario with UP’s indebtedness expected to reach Rs 414094.01 crore (28.6% of GSDP) on March 31, 2018. Chief minister Yogi Adityanath had blamed the previous BSP and Samajwadi Party governments that ruled the state in past 15 years for the prevailing situation on the financial front. Yogi said his government had brought out a white paper to let the people know how previous regimes worked. “This white paper 2017 is an effort to let people know about the conditions that we have inherited from the previous regimes…As previous governments stopped or started spending less on development projects instead of curtailing wasteful expenditure, development came to a stop. A mischievous attempt was made to balance the deficit during this period,” said Yogi while releasing the white paper here on September 18 this year.

First Published: Sep 29, 2017 14:44 IST