Notwithstanding the high-decibel drama over the so-called Central negligence by the State Government, the Budget for 2015-16 presented by Finance Minister Pradeep Amat lets the cat out of the bag as it shows how far the Central transfers are significant in aiding the State’s growth plan. Sample this. The State could fund only a mere 28 per cent of the total Annual Plan outlay pegged at around Rs44, 150 crore in 2015-16 from its own resources.
On the other hand, the Central assistance finances over 40 per cent of the State’s estimated Annual Plan outlay for the year 2015-16. More significant is that the State could fund only around 42 per cent of its total revenue expenditure for 2015-16 from its own revenue mobilised against funding nearly half (48 per cent) of the total revenue expenditure from its own revenue in 2010-11. This dip shows the State’s growing reliance on Central transfers and borrowings to meet even its annual expenditure, which puts a question mark over how sound the State’s state of finance affairs is.
The 2015-16 Budget also brings to fore many more dangerous blips on its financial management radar that puts a question mark on how far it would aid development agenda of the State. Consider this. The Budget 2015-16 estimates the total capital receipts at around Rs12,241 crore, but the ominous portend is around 98 per cent of the receipts are from loans or, say, through borrowings. Though the Finance Commission has asked the State to keep the borrowings less than 3 per cent of the GSDP or around Rs 10,202 crore for 2015-16, the estimated borrowing in the Budget is pegged higher by over Rs 2,000 crore.
While the Government borrows to fund its expenditure programme to aid economic growth, the actual capital expenditure that fuels growth is merely Rs15,285 crore against the officially shown value of Rs 18, 648 crore in the Budget. Therefore, the fund for growth accounts for mere 18 per cent of the much-touted total expenditure of Rs 84,488 crore. Such a paltry public expenditure to fuel high growth looks very doubtful, explained a senior RBI officer.
How sound the State finances are can be ascertained from the fact that the revenue surplus the State accumulated in FY 2014-15 is not out of revenue buoyancy but courtesy high non-utilisation of the estimated revenue expenditure plan for the said FY. Though it helped the Finance Minister show good revenue surplus, the side-effect it has is on the poor maintenance of its basic need projects like sewerage system, health infra and water supply, etc. The result is all of which then compounded to explode as jaundice on the face of the State.
Here lies the reality check. The Finance Minister has claimed in his Budget that the Government is now able to peg the highest-ever expenditure totalling nearly Rs85,000 crore for FY 2015-16, but this high amount is only 25 per cent of the GSDP estimated for the FY. According to a RBI document on State Finances, States having high per capita income can afford such a rate, but States with low per capita income like Odisha need to perk up the public expenditure much higher. The document lists out that even Bihar’s total expenditure now is around 40 per cent of the GSDP.
(The writer is a Bhubaneswar-based senior journalist)