Describes budget pro-people, development-oriented
By News Agency of Kashmir
Jammu : Comparing the spending on development profile during last five years of the coalition government with previous decade, the Finance Minister Mr. Tariq Hamid Karra told Legislative Assembly that expenditure by the end of next fiscal would be over Rs. 87000 crore and the raising to Rs. 80000 crore.
Presenting budget 2008-09 in the House amid thumping of desks by treasury bench, Mr. Karra said, “volume of Annual Budget had increased from Rs. 9000 crore in 2002-03 to Rs. 18400 crore in 2008-09
“The size of the state plan has increased from Rs 2,100 crore in 2002-03 to about Rs 5,500 crore. Out of Rs 2,100 crore plan the previous government spent Rs 800 crore on salaries and only Rs 1,300 crore on development. However, the next plan of about Rs 5,500 crore envisages an amount of Rs 4,900 crore for developmental and about Rs 600 crore as revenue expenditure. Thus, 89 percent of the plan constitutes capital and 11 percent as revenue (salaries), he added and said that investment by the state government in 1997-98 was Rs 900 crore and today the figure stands at Rs 4,900 crore – a five fold increase”, he maintained.
The Minister said, “the previous Government during its tenure raised a debt (borrowings) of about Rs 5,300 crore to finance expenditure of Rs 43,000 crore. On a comparative basis, the Coalition Government has raised net market borrowing of about Rs 8,400 crore to finance expenditure of Rs 87,000 crore”, he added.
Karra said, “the debt intensity of the previous Government’s expenditure was 12 percent and in our case it is around 10 percent, in fact, by funding additional Rs 44,000 crore of expenditure with Rs 3,100 crore of debt, the incremental debt intensity is 6.8 percent, which is almost half of the average debt intensity of expenditure of the previous Government”. “It may not be visible today because of the profligate legacy of the past, but as we go into our next phase of budgetary management starting from next year, it will help us a lot” he said and further added that all this has been done after cleaning up the fiscal back log that the government inherited. “By way of a recitation, in 2002-2003, there were loans worth Rs 1,008 crore that were overdue and had to be regularized. The servicing on Baglihar bonds was not even a part of the Budget. For that matter, both the Baglihar and power bonds were off-budget borrowings. The government cleared that liability. This year the government would clear a liability of Rs 668 crore of National Small Savings Fund (NSSF) loans that were contracted earlier and payments were due from 2000-2001”, he elaborated.
Karra further said, “the per capita income in the year 2003-2004 was Rs 14,848 at constant prices and in 2008-09 it will be Rs 19,899 at constant prices. This means during our period, income of an average person in J&K has increased by Rs 5,051”. While presenting the revised estimates for the current year 2007-08, the Minister said, “the total receipts during the current year are estimated at Rs. 17,354 crore against the budget estimates of Rs. 16,267 crore. “An amount of Rs. 13,901 crore has been estimated as revenue receipts while the capital receipts aggregate Rs. 3,453 crore. The increase in receipts is mainly on account of our decision to mobilize additional Open Market Borrowings (OMB) of the order of Rs.668 crore to payoff past and current interest liability on account of NSSF loans”, he added.
The Minister while deliberating on Receipts on Capital Account, which were budgeted at Rs. 1,441 crore, said that they are likely to go up to Rs. 2,298 crore. “While market borrowings will increase by about Rs. 1,200 crore, share in small savings will be down by Rs. 400 crore as the Central Government had asked states to raise 75 percent of the NSSF loan allocations through the OMB route”, he said.
He said that while the non-plan expenditure will be of the order of Rs. 12,191 crore, an amount of Rs. 4,463 crore has been adopted as plan expenditure and added that the expenditure under Centrally Sponsored Schemes (CSS) is likely to be at the projected level of Rs. 700 crore. In revenue and capital expenditure terms, the total expenditure translates into Rs. 11,855 crore on revenue account and Rs. 5,499 crore on capital account, he said.
Discussing the budget estimates, the Minister said that the total receipts for the year 2008-09 have been estimated at Rs. 18,443 crore of which Rs. 15,316 crore constitute revenue receipts and Rs. 3,127 crore as capital receipts. He said that the government was likely to receive an amount of Rs. 1,985 crore as share of central taxes and other central transfers are expected to be of the order of Rs. 9,525 crore. He said that the estimate for plan assistance, which includes an amount of Rs. 1,018 crore under PM’s Reconstruction Plan, has been kept at Rs. 5,156 crore as against the revised estimates of Rs. 4,014 crore for 2007-08.
As regards total expenditure, Mr. Karra said that it was projected at Rs. 18,443 crore out of which an element of Rs. 12,175 crore would account for non-plan expenditure while the projected plan expenditure was Rs. 5,518 crore, which includes Rs 1,018 crore under PMRP. He said that under Centrally Sponsored Schemes the level of expenditure would be Rs. 750 crore and maintained that in revenue and capital expenditure terms, the expenditure translates into Rs 12,089 crore on revenue account and Rs 6,354 crore on capital account.
The Minister said that the size of the Annual Plan for the next financial year has been fixed at Rs 4,500 crore and an outlay of Rs 1,018 crore projected under Prime Minister’s Reconstruction Plan (PMRP). He said that the government was grateful to the Planning Commission of India for also undertaking to fully fund the plan. He said that in the financing arrangement, Planning Commission has agreed to continue the dispensation of Power Reform Grant (PRG) of Rs 1,300 crore for the next year also. He stated that the direction and pace of the reform process in the power sector, as per benchmarks set in the Tripartite Memorandum of Understanding (MoU) has been positive and has been endorsed and appreciated by the Planning Commission. He said that the Planning Commission has assured that the last year’s balance of Rs 300 crore under PRG will be released shortly and added that the MoU for the current year has been finalized and released from out of the current year’s provision of Rs 1,300 crore will also start flowing after signing of the MoU.
Saying that the plan shall have three sub-plans, the Minister said that the sectoral sub-plan will lay emphasis on connectivity and power which were both central to infrastructure development. This sub-plan will also focus on building capacities in the health and education sectors. The operational sub-plan will aim at completion of ongoing works.
Karra said that plan expenditure which was Rs 2,218 crore in the year 2001-02 has reached a level of Rs 3,179 crore last year. “It is likely to be of the order of Rs 4,463 crore this year. Inclusive of CSS, capital expenditure which was around Rs.2,100 crore in 2001-02 is likely to touch a level of Rs 5,500 crore this year and over Rs.6,300 crore next year – showing a 300% increase! I leave the conclusion on the performance of the Coalition Government with regard to tempo of development to this august House”, he said.
Discussing Administrative Reforms, Mr. Karra said that “our tax performance has been good; largely due to a very positive switch-over to the new VAT regime and added that from a level of Rs 409 crore as GST in the year 2001-02, Commercial Tax collections last year show almost a three time increase at Rs 1,159 crore. The collections under Commercial Taxes during current year show a buoyancy of around 35% and are likely to reach Rs 1,480 crore. “If the same momentum continues, about which we are optimistic, collections next year will touch an all time high level of Rs 1,778 crore”.
“As a result of robust growth in VAT collections, overall taxes revenue has been estimated at a level of Rs. 2,299 crore for the current year. I have adopted the level of tax collection at Rs. 2,666 crore for the next financial year”, Mr. Karra said.
“Considering that the overall tax collection was Rs 804 crore for the year 2001-02, over a period of five years, overall tax collections have more than doubled and will go up next year by three times than in 2001-02” he said.
“He proposed constitution of a Committee headed by the Finance Secretary for working out the modalities to look into clearing tax scenario before March 31, 2008”, Mr. Karra said.
He said that a Green Channel facility is already in place at Lakhanpur to which nearly 250 dealers with clean track record have access. The Department of Commercial Taxes shall be adding another 750 dealers to this list.
“A provision of Rs 4 crore had been made in the current budget. A further provision of Rs 4 crore is being proposed during 2008-09 for support to cooperative sector”, he said. The Minister said, “to promote the culture of public-private partnership in the state, the industry associations of Bari Brahamna, Samba, Lassipora and Rangreth Industrial Estates will be given the option to manage one or two ITIs each”.
Karra said that the Provident Fund Act will apply to those enterprises that employ 10 workers and above as against present five or more employees. The 3 percent interest subsidy on working capital given to new industrial units will now be applicable to existing units as well for a period of two years, the Minister told the House.
Karra said that the government also proposes exemption from levy of additional toll on export of basmati rice to benefit the farmers and also proposed to continue with the placement of Paddy, Rice, Wheat, Pulses, Flour, Atta, Maida, Suji and Besan in the zero percent VAT schedule for one more year with effect from April 01, 2008. He said that to support the weavers engaged in traditional crafts the government proposes placement of locally handmade carpets also in the zero percent VAT schedule.
Karra said the government proposes the placement of rakhi thread, raw tobacco and bidis in zero percent rate schedule under VAT so as to bring it at par with the uniform VAT rates. He said that the government further proposes to place optical goods like spectacles etc alongwith both handmade and machine made soap in the four percent rate schedule under VAT.
Discussing the welfare measures, the Finance Minister said that continuing with its past practice the government has proposed to earmark an amount of Rs 200 crore to ensue that the state employees get DA as per the rates that will be notified by the Central Government. He further said that to address non-payment of old age and widow pension in time, the government has decided to increase the outlay on the non-plan side (state share) by about Rs. 8 crore to cover all the 2,68,737 sanctioned cases and also proposed the provision at the same level of Rs 37 crore for the next year. He also said that the state government has decided to enhance the scale of relief in respect of persons discharged on their own request to a level of Rs 500 per month and to a level of Rs 750 per month in respect of persons discharged on medical grounds. Accordingly, the government has raised the provision by Rs. 2 crore in the budget estimates for 2008-09.
The Finance Minister said that appropriate upward revision in the rates for advertisements in print media would be considered by Information Department in the first quarter of the next financial year and adequate provision will be made for placing in public domain the details of the activities and achievements of different departments.
The Finance Minister said that the state government has approved Aam Admi Bima Yojna (AABY) for the landless rural households for implementation, which shall come into effect from April 01, 2008. He said a health care insurance scheme for artisans and craftsmen, on the lines of the scheme applicable to Government employees, will be worked out.
Referring to Power Reforms in the state, the Finance Minister said, “for the purpose a tripartite Memorandum of Understanding with Planning Commission of India and Union Ministry of Finance had been executed in August 2000 for a central assistance of Rs. 3900 crores over a period of three years with Rs. 1300 crores every year in shape of Power Reform Grant (PRG). Under which focus is laid on the source of fiscal imbalance for covering balance in current resources and ensure proper use of special additional central assistance”. He said that under PRG Rs. 300 crore balance amount of last financial year was expected to be released shortly.
The Finance Minister said that 390 MW Dulhasti power project has been commissioned resulting in additional of 47 MW free power to the state. He said 450MW Baglihar phase-I project was nearing completion and scheduled to be commissioned by the middle of 2008. He said that 450 MW Baglihar phase-II Sawlakote-I and II, Kirthai-I, Kuru, Kawar, Ratle on Chenab basins, new Ganderbal project on Sindh and Hanu project on Indus river with a total capacity of 3796 MW would be taken up for execution in the 11th Plan.
Later, interacting with media, Mr. Karra explained the salient features of the budget and described it Pro-people so far as increase in Capital component and decrease in Revenue component have been effected.