With its commitment to waive farm loans and pay salaries as per 7th pay commission recommendations, the Yogi Government finds itself in a Catch 22 position whether to impose new taxes or go with a heavily deficit budget.
But officials in Finance department do not seem to have any clue. Neither has Finance minister Rajesh Agarwal been forthcoming in his reply.
"I know your question. You want to know whether we will impose new taxes or notIJ How can I say that as of nowIJ If I tell you this right now, what will I present in Vidhan SabhaIJ This much I can tell you that at this point I am unsure whether we should impose taxes or not," Agarwal told The Pioneer on Wednesday.
What started the tongue waging is the speculation that if Yogi government wanted to kickstart development projects as promised in poll campaign, where would the government generate the huge finances as it has to waive off `32,000 crore as farm loan as promised earlier. Besides, the regime will be facing an additional burden of ` 34,000 crore as salary for government employees for implementation of the 7th Pay Commission recommendations.
The next fiscal is also likely to witness a skewed ratio in expenditure and revenue collection. If high expenditure is expected in the form of farmloan waiver and payment of increased salaries to government employees, the next fiscal is bound to witness less revenue collection from Excise and Mining because of change in Mining policy and non-opening of liquor outlets across the state following Supreme Court directives to shift liquor shops from highways.
In this scenario, the government seems to be skating on thin ice where expenditure is likely to be high in 2017-18 and collection is likely to be less.
If one takes a glance at last year's budget the fiscal deficit was around `6000 crore and the then Akhilesh Yadav Government had spent over `10,000 in launching new schemes, which in fact is less than one-third of the amount that the government is likely to waive off as farmloan .
"Yes, the Government is alive to the crisis staring at our face. There is additional burden of `67,000 crore which we need to manage from our own resources. Please count another `1000 crore which we will provide for preparation of Ardh Kumbh Mela in Allahabad. It is a huge challenge to manage our resources. I have my plan in place and will answer all queries," the Finance minister said in his candid discussion with this reporter.
Agarwal said that there were some commitments which needed to be fulfilled. "We are clear about our responsibilities. Whatever payments need to be made would be made in due time. We will also clear cane farmers' and other dues," The Minister said.
On a question about Goods and Services Tax (GST), Agarwal said that Uttar Pradesh will stand benefited because it was a consuming state.
"States like Kerala, Maharashtra, Tamil Nadu, Andhra Pradesh and Gujarat which are producing states will feel the pinch," he said.
The Budget session is likely to be held in the first week of July.