Manipur Budget 2015-16 :: How can we make the expenditure sustainable?

Prof E Bijoykumar Singh *

Assembly building as a component of the Capitol Complex at Chingmeirong, Imphal :: Pix - Bullu Raj

The other side of a budget is the mobilisation of the resources needed to fund the programmes in a budget. As our expenditure grows, one needs to be careful about the manner in which the incremental expenditure is being financed. We may finance it with our own resources. We may do it with borrowings from the market.

Excessive dependence on either of them becomes counterproductive and a balance has to be struck between both. By how much can we tighten our belt to mobilise resources? Too much of income tax will take away incentives for work and too much of sales tax will make goods costlier and will encourage black marketing. Then even the revenues accruing to us will dwindle.

Tax is forced saving and saving cannot substitute consumption even for the future for long. We may borrow from the market but market borrowings have to be serviced in the form of interest payment and debt servicing.

The problem with this is that it is a committed item and even in the budget its claim has top priority in the form of expenditure charged directly on the consolidated fund of the state. It becomes more complicated when a stage comes where a large proportion of resources mobilised have to be used for repayment of debt.

That is why FRBM Act was enacted in Manipur also in 2005 as part of a directive from the central government and the Finance Commission. We were required to have revenue surplus and a permissible level of fiscal deficit. The state may incur deficit or surplus.

Manipur has been having revenue surplus and fiscal deficit for quite some time. In 2012-13 our revenue account expenditure stood at Rs 5316.5 crore and the revenue surplus was Rs 1503.22 crore. As per the budget estimates for 2015-16 revenue expenditure is projected to grow to Rs 7965.1 crore while the revenue surplus has been set at Rs692.77 crore.

Revenue surplus as a percentage of gross state domestic product has declined from 12.83 in 2012-13 to 3.69 in 2015-16 (B.E.) the falling revenue surplus means our capability for financing current expenditure with our income has been declining. The surplus is important because it can be invested and a dwindling revenue surplus means a decline in our ability to invest.

That means our ability to manoeuvre in the event of any major deviation has been considerably compromised. If revenue surplus disappears in the near future, we are going to borrow even for day to day expenses. Fiscal deficit as percentage of GSDP rose from 0.01 in 2012-13 to 3.12% in 2015-16.

Fiscal deficit is the difference between the revenue receipts plus non-debt capital receipts and the total expenditure including loans, net of repayments. This indicates the total borrowing requirements of Government from all sources. It should have been brought down to 3%. It should be pointed out that the state had fiscal surplus in 2013-14. In 2014-15 the budget estimate of fiscal deficit was 3.41% and the revised estimate was 5.7%. in other words we have started borrowing heavily.

Though the central taxes and non plan grants under Finance Commission and Govt. of India have increased between2014-15 and 2015-16 from Rs 1753.36 crore to Rs 3238.08 crore and from Rs 1510.14 crore to Rs 2121.81 crore respectively , devolution under CSS/CPS declined from Rs 484.25 crore to Rs 197.43 crore. The non-formula based annual central assistance declined from Rs 4323.78 crore to Rs 2179.95 crore.

When Rajan committee report came out, the possibility was predicted. But we did not take it seriously as UPA had lost power in the centre and we thought the report for all practical purposes would be shelved. Then it managed to re-enter through the Finance Commission report. Our SLR based market borrowing is projected to increase from Rs 691.35 crore to Rs 968.21 crore.

On the other hand there is no sign of any major resource mobilisation exercise and the increases in collection in state taxes and duties projected in the budget have been marginal. The economy drive at the national level has been widely anticipated and it should not be explained in terms of electoral politics. When the NDA government came in the centre it was expected to usher in changes in many institutions.

Our problem is our acute sense of lack of accountability in every sphere. It is not economics but ethics. The gap between what we preach and what we do has been growing. Add to it our penchant for blaming others for our ills. It is important to mobilise resources but what is even more important is to use what we have properly.

The massive leakages in any public work as part of the percentage culture and the absence of work culture have complicated the matter. By this logic no amount of central funding, as in the past, is going to deliver us from this bottomless pit we are getting into. Time has come to carefully look into what Dhanabir called human engineering via the education system.

In the centre also many changes are on the anvil to rework our education system beginning from ambitious programmes for training the teachers and equally ambitious curriculum and syllabus to make our system world class.

Here also all the stakeholders should do some serious introspections- parents should try to understand better the purpose of education, teachers should try to understand their role and stake in proper delivery of educational service. Sometimes I wonder how technological solutions like roads and bridges can deliver us when our attitude is all misplaced.