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| Again Zero Deficit, Coalition’s Last Budget At Rs 18400 Crore | | Karra takes potshots at NC; says J&K’s economic profile changed | | Early Times Reporter
Jammu | Jan 16
As the Finance Minister Tariq Hamid Qarra presented the last annual financial budget of the coalition government, the focus of his speech was more on a comparative analysis of fiscal management between the present regime and their predecessors, the National Conference government.
The Finance Minister presented in the legislative assembly Rs 18400 Crore Budget reflecting a ‘Zero Budget Deficit’ for the sixth year in row. The first Zero Deficit Budget was presented by Muzaffar Hussain Baig in June 2003 after Vote on Account for three months in March same year. Minister of State for Finance Ajaz Ahmed Khan read out the budget speech simultaneously in the Legislative Council.
Inviting protests from the National Conference, the Finance Minister opened his speech with a remark that the presentation of sixth budget which is Zero Deficit in a row and the statement about overall turnaround in the economy has come much to the chagrin of the opposition. This had the opposition members in their feet as asking the Finance Minister to focus on speech and not on politics. The Finance Minister, however, continued to lay special thrust on a comparative analysis with the National Conference.
The budget speech, however, did not make any specific mention of the agriculture sector, Public Sector Undertakings and unemployment. The Finance Minister said that a comprehensive policy on employment is being brought in the legislative assembly for discussion.
The special feature of the budget speech was that it reflected a sector-wise performance of all five years the present regime has been in office and not the present financial year alone. Karra said, each year of the last five years has packed a decade of performance in it. In the last five years including the current fiscal, and the next financial year, we would have spent around Rs 87,000 crore and raised approximately Rs 80,000 crore. This is more than what was spent and earned cumulatively in the decade preceding 2002-2003.
To put our budgetary performance in sharp focus, the Finance Minister said, the previous Government spent about Rs 43,500 crore and earned around Rs 38,000 crore over a six year period– just about half of what our Coalition Government has done. The resources raised are less than half of what we have done during our term.
From the time the Coalition Government took over, the size of the state budget has increased from Rs 9,000 crore in 2002-2003 to Rs 18,400 crore in 2008-09; more than double of what it inherited. Such an expansive public expenditure policy is unprecedented and indicates the massive scale of operations of the Government. Not only has the size increased, the quality of spending has improved even more.
The size of the state plan has increased from Rs 2,100 crore in 2002-03 to about Rs 5,500 crore. Again, up by more than twice. More importantly, out of Rs 2,100 crore plan that the previous Government implemented, almost Rs 800 crore was salaries and only Rs 1,300 crore was developmental expenditure. This means 40 per cent of the plan was nothing but salaries, which is a non-plan item. The Coalition Government reversed this sort of planning. In our case, we provided to pay for salaries from the non-plan, as they should be, and use the plan for developmental purposes with a component for maintenance.
Accordingly, out of the next year’s plan of about Rs 5,500 crore, an amount of Rs 4,900 crore is the developmental expenditure, only about Rs 600 crore is the plan revenue expenditure. As such, 89 per cent of our plan is capital and only 11 per cent is salary and maintenance. What more can any one want? Investment by the State Government in 1997-98 was Rs 900 crore. Today the figure stands at Rs 4,900 crore – a five fold increase.
The Finance 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. This means that to finance an additional expenditure of nearly Rs 44,000 crore, we have added about Rs 3,100 crore of debt liability.
Technically speaking, Karra said, the debt intensity of the previous Government’s expenditure was 12 per cent; in our case it is around ten per cent. 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 per cent – 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.
Now for the icing on the cake! All this has been done after cleaning up the fiscal back log that we 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. “We cleared that liability. What more, even this year we 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. True to form, this was not paid and left for us to service” said the Finance Minister. |
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