Saturday, March 10, 2012

Budget is Less Reformist

The Finance Minister, A. R. Rather has presented a zero deficit budget for the financial year 2012-13 with an attempt to apparently provide some relief to varied cross sections in trade, industry and agriculture, most of which can be said to be at the cost of operation of the relevant economic variables. That the financial position of the state was in shambles was what a person no less than the Finance Minister himself openly admitted early this year, has been left unaddressed in this budget by him . A state which is not in a position to even foot the annual wage and salary bill of its employees, can hardly afford to present the budget without devising means to increase its revenue income by even taking hard decisions since against an odd gross annual income of ` 6000 crores, as much as ` 13560 crores alone were required to pay as salaries to the employees and expected to go still higher to over `16000 crores during the next fiscal. So long as the question of sharing the benefits of a virtual tax free budget is concerned, at the end of the day, the basic question, on the other hand remains as to what has the budget to devise to neutralize the "precarious financial position" of the state due to which the Finance Minister very recently said that he wondered whether the Chief Minister was having a sound sleep. How much revenue in an Aam Aadmi's parlance, the state envisages to generate from its own taxes, levies and capital receipts to ensure developmental growth, is central issue to the budget when analyzed critically.

The economic barometers of our state in terms of per capita income and per capita consumption, for instance, are better than other states like Bihar, UP, Madhya Pradesh, West Bengal and Rajasthan and it is prosaic to see that while on the one hand the bill of the purchase of power was expected to cross `3100 crores, revenue there from was projected to be only `1732 crores. The Chief Minister himself admitted only last month that the state was incurring a whooping loss of ` 2000 crores annually on account of supply of electricity. That such a vital snag in the system has been left untouched in the budget, speaks volumes about the compulsions of the coalition Government largely on political grounds, which can result in a vicious circle of economic inertia to the extent of virtually there being no developmental plans to boost generation of power needed for the state both for domestic consumption as well as for our industry. Even the scenario on other fronts of development shall move at a snail's pace. The budget is sans any fiscal reforms and tangible policies. No details to curb ostentatious expenses by the government itself has been specified by the Minister in his speech though he is well experienced with the process of presenting the annual state budget and the current one is his twelfth budget presented in the state assembly over the years.

The state seems, therefore, to continue pursuing its policy of heavy dependence on the centre for generation of funds in the shape of grants, subsidies and other financial cushion as also a share from the pool of central taxes which being assured of getting as and when needed, has made the Finance Minister leave completely uncultivated those areas or segments,which could garner tax collections. The tax base has not been, therefore, tried to be expanded as per this budget. The debts accumulating against the State Government were not to show any downward trend, instead more share of the state's earnings were going to be drained out on servicing of such debts. Perhaps, it might be on the anvil of the state government to again approach the centre to waive off the debts on account of the fiscal deficits over the period. The budget is found neither in presenting a vision to move towards some self sufficiency nor has it in its bosom, any strategy for it. How many resources additionally was the budget promising to get from tobacco and liquor alone, the latter always becoming a soft target for shouldering extra burden to contribute to the state's ARM? No road map has been proposed as to how tax revenues were going to touch `4800 crores this fiscal as compared to `3500 crores in the last one despite losing a sizeable amount by way of exemption of VAT on LPG, fertilizers, flour, computers, stationery and other items.

Though a sum of ` 2 crores has been proposed to be earmarked for the treatment of the dreaded cancer, yet on the health front there are no innovative plans to up the level of existing infrastructure in the hospitals in the state, especially the hilly and inaccessible remote areas of the state which have inadequate road connectivity with the cities. Likewise although fertilizer have been made cheaper to the extent of according exemption from the VAT, the budget plans no innovative ways to boost agriculture sector and extend help to marginal farmers who complain of not only fertilizers being costly but their non availability too in time when most needed by them. The budget has left untouched various incentives to the farming community to find agriculture commercially viable and profitable to them to arrest the trend of the agricultural land getting shrunk and cultivation showing a downward trend. The reasons of credit off take from the financial institutions not showing a very promising trend in agriculture sector especially in dairy and dairy products should have been addressed in this budget. However, although crop insurance has been exempted of the GST Act, yet no plans are formulated or any ways proposed for providing the required facilities for irrigation, especially in areas of Jammu division where the existing facilities are found inadequate.

The Finance Minister has expressed satisfaction over the comparative "peace " having retuned to the state and termed the budget as "peace dividend", while at the moment, the level of "how much peace" is felt is not the issue but the dividend of peace appears hollow on the front of the unemployment problem, equally a cause of concern as an existing army of over 6 lakh unemployed youth are looking to the state for providing employment although more than 42% of the state's annual budget is going towards salaries and pensions. The lucrative and pragmatic avenues to private sector to invest in the state have not surfaced in the budget in order to provide employment opportunities to a good percentage of the unemployed to ease the pressure on the very limited avenues in government jobs. In short, the budget is conservative, not bold, less innovative, less reformist and appears somewhat politically laced.

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