Patna: Chief minister Nitish Kumar has been crowing about the big windfall gain for the state in the Narendra Modi government's latest budget. Sadly, the figures put out by Union finance minister Arun Jaitley give no cause for cheer.
What Nitish - who increasingly owes his political survival to the support he receives from the BJP - is seeing in the Union budget is a chimera.
The chief minister has said what Bihar is going to get - Rs 76,172.37 crore - is "beyond expectation". In absolute terms, Bihar will be getting more than what other states will receive, but the figures need to be seen in context.
Under the devolution formula that was laid down by the Fourteenth Finance Commission, Bihar is entitled to 9.665 per cent of the overall corpus created out of the 42 per cent overall share of the Centre's revenues that is collectively earmarked for states.
That percentage has not changed for Bihar or any other state. Result: Bihar gets a 17.04 per cent increase in net proceeds of Union taxes and duties in the budget estimate for 2018-19 over the revenue estimates for 2017-18.
That increase is almost the same - barring a small two decimal variation - as the other states.
So, why is Nitish Kumar so chuffed while his Andhra Pradesh counterpart - Chandrababu Naidu - is seething and alleging that the Centre has reneged on its promise to carve out a special package for the newly redrawn southern state?
Naidu, who like Nitish is an ally of the NDA government at the Centre, had lobbied hard for a special five-year package of over Rs 20,000 crore. Andhra was hoping to receive special assistance in the form of grants so that it could repay loans and interest on externally aided projects to be built over the next five years as well as outstanding loans.
Once that got nixed, Naidu went ballistic.
Nitish has also been seeking a special package for Bihar to tide over his problems.
The Centre has consistently maintained that the Finance Commission's recommendations on the devolution formula has put it in a straitjacket with little wiggle room for disbursing special benefits to states, except for the Northeast and special category states.
While Nitish is optimistic about the tax share, economists have a word of caution. "The actual central taxes given to states will depend on the collection of GST. During the Ninth and Tenth Finance Commission period, Bihar actually got Rs 12,000 crore less than what was promised to it. It was after P. Chidambaram's tenure as finance minister, when the tax net increased, that Bihar actually received Rs 12,000 crore more than that was promised," said economist Shaibal Gupta.
The central tax distribution, which includes GST, income, wealth, central customs and excise taxes, is estimated to be over Rs 7.88 lakh crore for the financial year 2018-19. In the last financial year, it was around Rs 6.73 lakh crore. During 2018-19, Bihar's estimated share is Rs 76,172,37 crore against Rs 65,083.19 crore in the previous fiscal. Neighbouring state Bengal for example, will be given Rs 57,772.50 crore during 2018-19 against Rs 49,321.13 crore last year.
Odisha will be given Rs 36,585.93 crore against Rs 31,272.03 crore while Jharkhand's central tax share has been projected at Rs 24.739.84 crore against Rs 21,143.64 crore. Uttar Pradesh, the most populous state in India, will be gaining more than Rs 20,000 crore from its previous tax share in absolute terms.
The other reason for Nitish to be happy about is that the Prime Minister's economic package of Rs 1.25 lakh crore appears to have found its ground after the chief minister's meeting with Union road minister Nitin Gadkari last week.
"Even if half of what was promised in the seven resolves and the PM's economic package is fulfilled by 2020, Nitish Kumar will go to elections on a more confident note. During the Grand Alliance regime, Bihar was fund-starved as the Union government refused to give the remaining amount under the Backward Regions Grant Fund and progress on the PM's economic package was slow. Nitish's real challenge now is to acquire land for the remaining central projects like Vikaramshila University and the second AIIMS gifted to Bihar," said a senior JDU leader, stressing that the "ease of doing business" with the Centre has improved after joining hands with the BJP.
