The State Budget was indeed Stately! Lots of Excellent Proposals!
I thought I’ll take a look, first at the Actual Performances: a) the Economic Survey of Goa, for the backdrop, b) the Performance of the State last year against Budgets of last year (2022-23), c) Some Promises vs fulfilments and lastly d) the Budget Proposed for next year 2023-24.
The “Public Debts” page gives out the current-price GSDPs of each year and it’s quite disheartening to see we grew just 2.2% at current prices last year. If I adjust inflation (Labour Bureau) 2.3%, there’s no growth at all! So, the lessons are; a) The Economy has to grow around at least 12% a year at current prices, b) Of a Budget of 26,000 crores, (which includes fresh borrowings of 5,500 crores), 16% goes to Debt-Servicing, another 40% to Establishment and Staff Emoluments and what is left is just 44% for developmental, maintenance and social work. Whereas, the Debt-Servicing percentage has marked improvements of 2% over last year’s percentage, the Salaries and Establishment costs have turned worse by 7%. Ironically, this is after an unemployment rate, second-highest in the Country at 10.9%. If I benchmarked Sikkim, that State grew at a CAGR of 12.66% between 2015-16 and 2020-21 and its Unemployment Rates are just 3%, (RBI data).
So, the cornerstones for the Swayampurna Economy must have been Growth, Productivity and Efficiency Enhancements, Revenues (and Arrears) collections, Skilling and Employment (which again means Manufacturing, Agriculture and Tourism mostly. (And I shall restrict myself ONLY to these three areas for today’s discussions, along with general observations on Revenue and Expenditures).
My Take:
a) Agriculture: I see lots of scope. There is a diminution in Crop-production of 9% at constant prices over 5 years back as per the Economic Survey whereas nationally, the growth was 10.5% over this period (Union Economic Survey). Something is amiss! Our yields for Paddy were 2,800kgs/ha, nationally we were 3,520kgs/ha and just for reference, China was 7,100kgs/ha. Overall total agricultural land area fell from 1.24lakh ha in 2012 to 1.15lakh ha in 2020 (CEIC). Agriculture undoubtedly is not only, a high employment generator, but it’s also closest to the Swayampurna, in that, we are heavily dependent on our neighbouring States for agri-outputs. I wish I saw more for that in the Budget, I must say I was disappointed as Agriculture remains just 5% of our GSDP constant prices (same for the last 5 years), it got an allocation of only 2.6% of the Budget last year, next year it gets still lower at 2.2%. I recollect in the last year’s Budget, there was a promise to provide an on-line platform for farmers to sell agricultural produce and processed food items. I miss it now!
Second, the demographic shift from rural to urban clusters in the Economic Survey an eye-opener, there’s need for expansion of urban infrastructure and actions for stemming migration.
b) Manufacturing: Manufacturing, as is known constitutes 43% of our GSDP. But according to the Economic Survey, it’s shrunk from 46% five years back. In real-terms it shrank from 22,000 crores 21,650 crores at constant prices. This is risky for jobs. At diminishing thru-puts you can’t possibly generate large-scale jobs, with efficiency increase and systems developments including wide-scale AI deployments! Budgetary Allocations remain nearly the same at just 0.6% as last year, at Rs156crores. I’m not happy. I was expecting a whole lot of initiatives in logistics and the elusive “Logistic Hub”, with Mopa going on full stream Rs 3,000 crores invested, with full deployment of 5g. There was a promise for a Dedicated Logistic Policy, to make Goa a destination for Multimodal Transport Hub.
c) Tourism: Tourism is the other area with great potentials in generating quality employment, increasing piggy-back opportunities in other areas targeted for development. As per the Economic Survey, “Hotels and Restaurants” record a growth of just 3.3% in five years. The Budgetary Allocations for Tourism this time was Rs 263 crores (just 1% of the Budget), a growth of only 6% over last year. There is a need for Domestic Private Investments and FDIs in line with the Masterplan of 2015. (Detailing out expenditure of around 4,200 crores in four years of which 2,800 crores was from Private Domestics and FDIs).
There are however, excellent recommendations in the Budget, for Caravan Tours, Eco-camps and cottages and Heritage Drinks.
d) On Revenues, Expenditures and Growth: I can see better Revenue Surplus, actuals last year, mainly from higher Share in Central Taxes and Grants in Aid from the Centre, but we fell short of collecting our budgeted Non-Tax Revenues by 60 crores as also Revenue Expenditure Control could be better where we overspent a good 800 crores.
On the Budget side, could not figure out why our Grants-in-Aid should be halved from last year and “General-Services Expenditure” goes up by 660 crores, consuming more than 10% of the fresh borrowings. On borrowings we must notice, our Debt to GSDP increased from 19% 5 years back, to 24% currently, and our Deficits are already budgeted 4.1% on a GSDP of a trillion rupees at current prices. The norms 3.5% (where 0.5% was only for Power Sector reforms)! A loud thought, I think we could defer those new expensive sundry administrative buildings and “Prashasan-Stambh” for the moment and concentrate on value-additive infrastructure only.
The Top-Five innovative proposals, I’m waiting for are: the Statistical Data-Hub at 10 crores, The National Games 225 crores, The Green-Goa Policy, Goa becoming the “Carbon-Credit Capital of India with 10,000 green jobs, the 300-MW Solar Project and the Animal Emergency Service.
And before I conclude, the Growth promised, of 10.3% at Current Prices is impressive and, in my view, achievable if we keep an eye on our priorities and on drivers thereof.
(Binayak Datta is a
Finance professional)
