Jharkhand’s Budget Analysis, Focus Is On Sources Of Funds

Before the main budget was to be tabled in the Jharkhand State Assembly on 15th March 2012, State Finance Minister presented the third Supplementary Budget for the year, of Rs. 798.96 crore while the original budget was for Rs. 33121.70 crore. It is ironical that Supplementary Budget was tabled; even when Jharkhand Government was able to spend only 33% of the original budget while at the same time it sought additional amount of Rs. 798.96 crore of the budgetary provision.

Jharkhand's Budget FY 2012-2013
Jharkhand’s Budget FY 2012-2013

Before we take a look at the original budget, let us begin by taking a look at the key figures taken from Jharkhand’s latest Economic Survey figures to put Budget in proper perspective:

Jharkhand’s DEMOGRAPHIC Particulars

In figures

In % terms

1 Total Population

3,29,66,238

100%

2 Rural Population

2,50,36,946

75%

3 Urban Population

79,29,292

25%

4 Population Below Poverty Line

1,31,86,495

40%

5 No. of villages

32,615

N.A.

6 No. of Towns

95

N.A.

Jharkhand, being an economically underdeveloped state with about 40% of its population living below poverty line (BPL), it is imperative that Jharkhand Government should focus most of its energies in making a dent into the poverty behemoth. Besides as 75% of its population lives in villages, the state Budget should reflect heavy biases towards Poor and Villages.

Now let us take a look at key figures of Jharkhand Government’s Budget, the sources of funds.

 (Rs. In Crore)

 

Particulars

2010-2011

Actual

2011-2012

Budget Estimate

2011-2012

Revised Estimate

2012-2013

Budget Estimate

 

SOURCES OF FUNDS

 

1 Revenue Receipts

18781.12

27746.16

25794.59

32425.57

2 Tax Revenue

11870.98

15233.33

14527.79

17236.78

  (a) State’s share of Central Taxes

6154.35

7393.30

7393.30

8502.29

  (b) State’s Own Taxes

5716.63

7840.03

7134.49

8734.49

3 Non-Tax Revenue

6910.14

12512.83

11266.80

15188.79

  (a) State’s Own Non-Taxes

2802.89

3222.79

3608.66

3960.89

  (b) Grant-in-aid from GOI

4107.25

9290.04

7658.14

11227.90

4 Capital Receipts

3434.91

5375.54

5525.42

4688.23

  (a) Recoveries of Loans

24.12

34.12

54.17

55.91

  (b) Other Receipts

0.00

0.00

0.00

0.00

  (c) Borrowings & Other Receipts

3410.79

5341.42

5471.25

4632.32

5 Total Receipts

22216.03

33121.70

31320.01

37113.80

With large percent of Jharkhand’s population surviving Below Poverty Line (BPL), it becomes obligatory for Jharkhand Government to take all the necessary steps to reduce the level of widespread poverty. To make any kind of dent in poverty, Jharkhand needs loads of funds to assist people and families to move up, from Below Poverty Line (BPL) to Above Poverty Line (APL).

Let us again look at the key figures taken from Economic Survey, to understand the great divide:

 

Particular of Jharkhand’s INCOME

 
1 GSDP at FC at Constant 2004-2005 Prices

Rs. 83,16,990 lakh

2 Per Capita GSDP (Gross State Domestic Product)

Rs. 26,214

3 Human Development Index

0.461

With 40% of population living below poverty line and yet at the same time our high Per Capita GSDP of Rs 26, 214/- do tell us about the ever-widening of gap between the poor and rich people in the state. Jharkhand would do much better, trying to reduce this ever widening economic gap, as it is already a cause of socio-economic-political problem seen in our state, between the haves and the have-nots, resulting in violent and not-so-violent clashes of interests. One of the ways could have been to take innovative steps to raise both Tax Revenue and Non-Tax Revenue in its future budget by following the simple idea “Tax the Rich to Serve the Poor”.

However, on the other hand it needs to be much more creative as far as raising funds is concerned. By creative, we mean that the Government’s fund-raising measures should not create inflationary pressures in the state, which again affects the poor people much more badly. High inflation means many food-items start to disappear from the plates of economically weaker sections of society.

But where does Jharkhand’s Revenue (Rupee) come from?

Particulars

% of Total Revenue (approximate)

1 Grant-in-Aid

30.26 %

2 State Own Taxes

23.56 %

3 Share of Central Taxes

22.95 %

4 Public Debt

12.49 %

5 Non-Tax

10.66 %

6 Recovery of Loans & Advances

0.08 %

Jharkhand has two options to increase its Revenue, either to increase state’s own taxes or to ask greater share from Central taxes, for instance the royalty on minerals mined from state could be increased with concurrence from Union Government or it could demand greater share from the earnings of those companies which have large part of their operation based in Jharkhand, but they pay less amount to due to location of their corporate headquarters in other parts of the country.

Now let us look at the details of Tax Revenue given in the Budget.

(Rupees in Crore)

Summary of Tax Revenue

2010-2011

Actual

2011-2012

Budget Estimate

2011-2012

Revised Estimate

2012-2013

Budget Estimate

1 Tax on Income & Expenditure

3676.74

4456.23

4456.23

5174.66

2 Tax on Property & Property Transactions

463.92

551.57

539.12

584.96

3 Tax on Goods & Services

7730.32

10225.53

9532.44

11477.16

Sub-total

11870.98

15233.33

14527.79

17236.78

On a cursory glance, the figures of taxes on property and property transactions seems grossly inadequate, the Government should plug-in the leakages (there are many) in its collection across the state. It is known fact that unless the registration of property and property transactions are done as per our law, the taxes on the same would continue to remain on the lower side.

On the other hand, the details of Non-Tax Revenue given in Budget too are unsatisfactory.

(Rupees in Crore)

Summary of Non-Tax Revenue

2010-2011

Actual

2011-2012

Budget Estimate

2011-2012

Revised Estimate

2012-2013

Budget Estimate

1 Interest, Receipts, Profits, etc

99.14

179.20

101.20

109.23

2 Other Taxes:
i.  Normal Services

309.27

130.54

329.22

355.95

ii. Social services

126.90

109.44

150.09

164.39

iii. Economic Services

2267.58

2803.61

3028.15

3331.32

Sub-total

2802.89

3222.79

3608.66

3960.89

Coming back to present budget, it seems that both Tax-Revenue and Non Tax-Revenue is grossly inadequate to fund the development and welfare measures initiated by the State Government. Basically, the year-on-year growth on both Tax and Non-Tax revenue leaves much to be desired. The Revenue is inadequate to fund the Jharkhand’s growing needs for all round economic development.

Sameer Bhagat
Join me

Sameer Bhagat

Author, Salvaging Adidweep.
Sameer Bhagat
Join me
Sameer Bhagat

Written by

Author, Salvaging Adidweep.

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