UP Budget 2018-2019: Accommodating populist schemes a challenge

Amid indications of likely shortfall in revenue (against targets), the Yogi Adityanath government, which is busy finalising state’s annual budget for 2018-2019, faces a daunting task of accommodating populist schemes in view of 2019 Lok Sabha elections.

The budget is likely to be presented in the state legislature next month and the final shape is being given to budgetary proposals of different departments.

A close scrutiny of the state government’s revenue receipts by December 31, 2017 indicates that its major departments have not been able to meet the targets. The state government has been able to generate revenue of Rs 41,700 crore against the target of Rs 44,700 crore on December 31, 2017.

It includes excise revenue of Rs 11,322 crore against the target of Rs 13,455 crore and stamp duty of Rs 9700 crore against the target of Rs 13,000 crore. The transport department, however, exceeded target of Rs 4,250 crore and registered revenue generation of about Rs 4,600 crore.

The crop loan waiver scheme involving expenditure of about Rs 36, 000 crore and rising salaries due to implementation of 7th pay commission recommendations for its staff and teachers have put additional pressure on the state’s resources.

The state government had spent a sum of Rs 1,19,393 crore on payment of salaries, pension and interest in 2015-2016. Its expenditure under this head is expected to go up to Rs 1,64,181.67 crore in 2017-2018.

When the preparations for annual budget began, the state government had given indications that it may have to drop ‘useless’ schemes or cut wasteful expenditure to make way for the new ones.

Principal secretary, finance, Sanjiv Mittal in a government order issued on September 27, 2017 had hinted about this saying, “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 to scrap ‘useless’ schemes.”

The state government has already deferred payment of seventh pay commission arrears of about Rs 20,000 crore. It will now be paid to employees and pensioners in two instalments in 2018-2019 and 2019-2020.

It may be mentioned that Uttar Pradesh’s indebtedness is expected to go up further to Rs 4,14,094.01 crore (28.6 percent of GSDP) on March 31, 2018 against Rs 3,74,774.57 crore on March 31, 2017. The state government’s fiscal deficit remained technically at 3.22 of GSDP despite reaching 4.4 percent of SGDP mark on March 31, 2017.

This became possible with the help of Centre’s guidelines to exclude bonds of UDAY scheme (under financial restructuring of DISCOMs) out of purview of annual loan limit under Fiscal Responsibilities and Budget Management (FRBM) Act.

First Published: Jan 22, 2018 17:06 IST