The State Government has urged the Union Government to revert to the earlier Gross State Domestic Product (GSDP) calculation methodology so that the annual borrowing limit of the State would not be diminished.
The method of calculation adopted for 2016-17 will bring down the borrowing limit compared to the ceiling determined for 2015-16 in terms of recommendations of the 14th Finance Commission (FFC).
ACS Finance R Balakrishnan presenting Odisha’s borrowing data in the All India Finance Secretaries’ Meet held on 11 April pointed out that if GSDP is calculated with the methods adopted for 2015-16, the borrowing limit for 2016-17 of the State would be Rs3,83,228 crore while by the current calculations the limit has decreased to Rs3,58,919 crore.
He urged the Union Government to revisit the GSDP methodology and enhance the State’s annual borrowing ceiling for 2016-17. He informed the meeting that State’s market borrowing calender is prepared with an eye on the cash balance.
The ACS said that the Odisha Government guarantees are one of the lowest among the States and is 3.18 per cent of revenue receipt less Grant In Aid in the second precdeding year and is about 0.39 per cent of the GSDP.
With end to the Plan and Non-plan dichotomy by 2017-18, Odisha has asked for the need to focus shift to efficiency, effectiveness and outcome of Expenditure in the Budget rather than harping on classification of capital and revenue components.
Union Minister Finance Arun Jaitley has already announced that from 2017-18 there would be no Plan and Non-plan classification but expenditure would be classified as revenue and capital by both the Centre and States.
In the meantime, the Centre has started linking of Plan releases through Public Financial Management System (PFMS) Portal. Odisha Government has also linked State Treasury with PFMS.
Balakrishnan said that there is a need for electronic interface with State Treasury for validation of bank accounts of beneficiaries and vendors from the core banking solutions of the bank.
He also suggested that the bank accounts of the implementing agencies of the State Government Schemes may be allowed to be registered with PFMS portal for monitoring financial progress of the schemes and the balances lying with the implementing agencies.