White Paper on Manipur State finances: A lengthened Budget speech
Source: Amar Yumnam/The Sangai Express

Imphal, July 02: Since the State Government announced a few days back that it plans to bring out a White Paper on the financial situation of the State, most of the intelligent eyes of the State have been anxiously looking forward to it.

The general public too have been curiously waiting for it since it is for the first time they have heard a Government seriously talking of a White Paper.

Well a White Paper is no joke.

It is a very important document brought out by the Government on a crucial issue affecting a Nation or a Province reflecting the thinking mind of the administration and throwing up alternative avenues for intervention while at the same time firing the imagination of the people.

Manipur's White Paper: As promised the State Government has prepared a document on the State finances.

This document has 34 pages including cover and comprises of two chapters.

The strategic motive behind the preparation of the White Paper is to initiate a step towards creating "a congenial environment for establishing stable and effective governance capable of implementing hard policy decisions and programmes for augmenting infrastructure facilities that would ultimately attract private investment and generate employment in the non-Government sector" (para 3).Regarding the objective of fiscal policy the document writes that the "foremost task of economic planning is prioritization of the various objectives.

A sound State-level fiscal policy is aimed at allocation of financial resources for ensuring quality infrastructure.......

education and health facility by containing administrative expenditure" (para 19).The document mentions eight reasons for the recent financial crisis facing the Government.

They range from growth of revenue expenditure, losses on State enterprises and lack of buoyancy of the State's tax revenue to the ethnic clashes, etc (para 25).The document explains the revenue and expenditure trends of the State Government.

Overall, the document identifies the burden of the payment of salaries and pensions as the villain of the piece.

It says �the State has been reeling under the burden of payment of salaries and pensions�.

The whole truth: One whole truth contained in the document and which needs everybody's appreciation is the admission of "steady erosion of public confidence in our ability to install stable and effective governance.

Corruption in the bureaucracy is perceived to be endemic and deep rooted"(para 4).Other than this brilliant admission of reality, which we may be interpreted as the indicator of the Government on a path to rediscovery, there is little to be commended in the document.

The document is basically characterized by (a) a usual tabulation of revenues and expenditure; (b) text-book like statements (paras 21, 22); (c) confusion between economy of the State with the finance of the Govt (para 23); (d) confusion about financial dynamics (para 25); (e) confusion between technology and intervention for technological-development (para 14); and (f) lack of understanding of the paradigmatic difference between State activism in economic activities and the liberalization approaches.

Overall, the document looks like a lengthened budget speech of a Finance Minister and not a serious document like a White Paper.

Nevertheless: Nevertheless, we should be appreciative of the fact that the State Government has now started applying its mind to the issues of the State.

Better late than never.

We would however like to explain the present financial crisis as basically a problem of the Government.

The economy is doing well as is evident from its fundamentals.

The problem lies at the coffers of the State Govt.Further, this problem of financial health of the State Govt is fundamentally a problem of declining quality of the administration and not necessarily on account of the payment of salaries and pensions.

The problem arises when the commensurate output does not come out of the payment of salaries.

All these can be understood by examining a single table provided in the document, the table on Gross State Domestic Product given on page 31.The output arising from the sector of public administration is a declining proportion over the years.

This itself speaks a lot about the quality of administration while at the same time identifying the possible areas for further scrutiny.

Now there is an urgent need for examining the structural composition of the employees under the State Govt while at the same time adopting a final stand on the fate of the State enterprises.