The Telegraph
Friday , February 22 , 2013
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Soft bid to please all

The budget for any economy is not merely an account of expenditure and receipts but is an indication of development policies to be pursued by the government.

The government of Bihar presented its economic survey 2012-13 on February 19 and has presented its budget on February 21, which may be seen in continuity of the growth process of the state for the last couple of years. It needs to be appreciated that Bihar has been able to come out of a low growth syndrome of pessimism and has moved towards a phase of growing economy.

During the 11th Five-Year Plan, this state could achieve a remarkable growth rate of 11.95 per cent per annum. However, if we look at the growth rate of Bihar for 2005-06 to 2011-12, it has been 10.18 per cent per annum. Thus, the Eleventh Plan has achieved a higher growth rate. If one compares the growth rate of the year 2011-12 and the projected growth rate for 2012-13, it has declined from 16.7 per cent to 9.48 per cent. This will have significant implications on narrow based resources for the development of Bihar.

While appreciating this growth rate, two cautions are important one, the base of this economy is still very narrow and this high growth may not provide enough resources to keep pace with and to sustain this rate by itself. Therefore, extra resources are required to maintain this momentum of growth.

Two, a major contribution to this growth rate comes from construction, communication and financial services sectors which have a low base of labour absorption capacity.

Another important concern is to address growing intra-regional disparities. The per capita income of Patna district is Rs 53,639, whereas the other extreme is Sheohar with merely Rs 5,522 against Rs 5,647 in 2007-08. The concerns of declining per capita income in a poor district such as Sheohar is far more serious. The distribution of income among districts is also very unequal.

About 12 districts have per capita income below Rs 8,000, nine below Rs 9,000, six districts below Rs 10,000, three below Rs 11,000, three below Rs 12,000, two districts below Rs 15,000 and one district below Rs 19,000.

If one takes a look at the budget, the total proposed expenditure is to the tune of Rs 92087.93 crore and total receipts is pegged at Rs 91,899.16 crore. Total revenue receipts have increased by 17.66 per cent and total capital receipts by 26.74 per cent. Revenue expenditure has increased by 20.17 per cent and capital expenditure by 6.22 per cent. Fiscal deficit ratio to GSDP has marginally declined from 2.87 per cent to 2.79 per cent (proposed).

It is appreciated that the government is serous about education and has accorded high priority to it with 15.29 per cent provision of resources. The increase is also about 41.62 per cent but challenges of the Right to Education Act will still remain. Expenditure on health has increased by 8.78 per cent. The agriculture roadmap is one of the important areas for inclusive growth with a provision of Rs 1,200 crore last year. This year the expenditure was increased to Rs 2,176. 75 crore, a significant jump of 81.4 per cent.

Another area which witnessed an exceptionally better flow is food and consumer protection, by 285.73 per cent. However, this was compensated by reducing the expenditure on account of rural development by 4.13 per cent. There is a little increase of 4.52 per cent in rural work. If one combines both as a whole, there has been a meagre increase of less than Rs 10 crore, i.e 0.31 per cent only. In real terms the expenditure on rural development has declined if one takes inflation into account. Many new initiatives for development of rural areas have been taken but flow of funds raises many doubts as well. Undoubtedly strengthening MNREGS is reflected in this budget.

Energy is the key to development and industrialisation and the government has been assuring the people of this time and again. However, the provision for energy has declined by 10.54 per cent from Rs 2,001.75 crore in the last fiscal to Rs 1,790.68 crore in this budget. This may have serious implications on energy development programmes in the state.

There has been a significant decline in the planning and development sector, which may have serious implications on strengthening inclusive planning process.

Imposing higher taxes on tobacco, liquor, UPS, battery, elevator etc. is good. But concessions on coconut is beyond comprehension in a resource-starved state like Bihar, where schools and hospitals are yet to be provided with basic minimum facilities. Moreover, intra-regional disparity needs aggressive focus, which appears to be missing and is a weak point of the budget. On the whole, the budget appears to be a mix bag of provisions to please every one, which never happens.

The writer is a professor of economics and the director of AN Sinha Institute of Social Studies, Patna

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