Budget being a short-term and seasonal exercise is primarily an answer to the economic survey of the preceding year. Economic reforms and policies need not wait for the budget. Traditionally, budget should limit itself to reforms in revenue mobilization to avoid leakages in collection. Secondly, curbs on expenditure, cost savings, direction of expenditure and efficiency of spending comes in the ambit of the budget. Thirdly, the end picture should move to one of fiscal responsibility.
The results of the Economic Survey 2013-14 show a decelerated growth of 8.41% from the earlier 12%. The ban on mining which is a main sector along with Tourism, Real Estate, Other Services and Manufacturing brought down the growth rate. There are no positive signs of re-starting of mining operations in the fiscal year 2013-14 except for the handling of the existing dumps. Hence, it was expected of the Finance Minister to provide boost to manufacturing, agriculture and allied activity. This budget draws a blank in respect of any concrete steps to offset the falling growth by working on alternatives. Linking of agriculture and allied services to tourism industry would definitely be rewarding in terms of income and employment.
Along with sustaining growth, the Finance Minister should have come out with measures to step up the tax revenue through better administration in respect of VAT collection. The contribution of the service sector in the GSDP has shot up from 52% to 64% over the last decade. However, this is not accompanied by substantial rise in revenue through VAT. The Finance Minister has hiked sales tax and excise levies on tobacco products and liquor to mop up some additional revenue.
The overall financial picture is one of concern. As per the Fiscal Responsibility & Budget Management Act (FRBM), the revenue deficit needs to be nil and the fiscal deficit within 3% of the GSDP. The budget shows a revenue deficit of around Rs. 346 crores. This means that the unhealthy practice of using capital receipts to finance revenue expenditure continues. Over the large four years, the State is moving from revenue surplus to deficit. The estimated fiscal deficit is around 3.4% of GSDP which may well cross the estimates.
The high level of primary deficit is an indicator that government borrowings are increasingly used to service old loans. The non-plan expenditure which consists of salaries, interest payments and pension is around 72%. This burden of spending can be only reduced through better tax collection and administration.
The Finance Minister estimated the loss of revenue due to the mining ban as Rs 2000 crore. However, in the same tone the figures of expected revenue on account of Supreme Court supervised e-tendering of dumps could have been provided. The government has also collected resources through renewal of mining leases. It looks like the creamy layer of mining dependents are vocal and have become vote banks which are to be entertained and kept happy. The Finance Minister has earmarked Rs 150 crores to pay the loans of truck operators.
“To find yourself is to lose yourself in others”—-this is how the Finance Minister opened the budget speech quoting Mahatma Gandhi. There is nothing in the budget for any stakeholders to celebrate. The Official Language Department outlay has been increased by 400% from Rs 2.46 cr to Rs 12.18 cr. The Finance Minister also got lost in yoga, Sanskrit Ved Mahavidyalaya, Ayurvedic College and the Academy of National Security. If he had chosen to establish a College of Agriculture & Horticulture, it would have been more appropriate for the occasion. With the Goa Horticulture Corporation providing marketing support, the focus should be to utilize local land and human resources so that the trading activities of the horticulture corporation benefit the locals by generating employment in agricultural sector.
The draft investment policy with an objective of creating 50000 jobs in next five years and envisaging an investment of 25000 crores submitted in September, 2013 is waiting finalization. This should be accompanied by removing the constraint of land, power and human resource. This matter has been further delayed.
Governor’s address
Governor’s address is prepared by the political executive. It is not an address of the Governor and by the Governor. The political executive should maintain the decorum and dignity of the office of the Governor by avoiding political agenda. This seems to be a fry cry in the regime of Manohar Parrikar led BJP government. The accusation on the central govt of not rescuing the State from financial crisis on account of mining ban is misplaced. The approach of the Chief Minister to the Central Govt was filled with contradictions. On every occasion, when the CM pleaded for financial assistance, it was supplemented with immediate rhetoric that the economic and financial position of the govt was strong. The CMx would brandish statistics of how the economy and financial indicators were within the comfort zone, if not better. On most occasions, the demand made was shown to enable freebies to the so called mining dependents rather than to meet the genuine gaps in development spending. In short, no definite clarity was provided of the quantum of assistance required with rational justification. If the first step taken was to demand assistance, it was followed by the second step to demonstrate glittering heroism that the govt can do without compensatory financial assistance. There was no supporting data to reflect whether the support elicited was for the best of the mining dependents or the worst and vulnerable.
The height is to make the Governor flirt with election results by putting in the mouth of the Governor the hope that the next govt at the Centre would be “friendly” and sensitive to Goa’s demand for financial assistance. This violates conventions and propriety in preparing the address of the Governor.
The financial crunch has not affected the ‘free feasts” in the form of populist schemes. The government abdicates critical and sure avenues of resource mobilization by giving tax reliefs. The revenue leakages in VAT are almost equal to revenue collections. It is a discredit to the government that the office of the governor is used to take potshots at the central government.
