Preparing a budget that caters to the interests of all sections of people at the time of economic slowdown is difficult, especially when there is fiscal stress on the state’s economy. As one can find neither cooperative federalism nor federalism as such in the current scenario due to the attempts made by the central government such as not raising the debt ceiling, reduction in the share of tax revenue, shrinking central assistance, etc. fund raising is the way out.

Amid constraints such as restricting the revenue deficit to 1% and fiscal deficit from 3.61 to 3%, revenue generation along with eliminating unnecessary expenses that come under non-developmental expenditure is the ideal strategy. The reliance on GST revenue is still in the budget with the hope that it will grow at a high rate of 20%. This can be achieved if the state machinery is able to bring those businessmen who have not registered under GST and thereby evade tax. There are suggestions in this direction. Steps for collecting tax arrears and reorganization of pension schemes are bold attempts.

The government has been continuously criticized for the low capital expenditure amid high committed expenditure by way of salary, pension and interest payments. Though it was 66% higher than the previous year’s allocation, it was almost 1.63% of the GSDP and hence it is not up to the desired level. However, the proportion is gradually picking up over the period of this government as it was 0.83% in 2014-15. The present budget has not compromised on this aspect as there is 58% increase in the capital expenditure as compared to the previous year’s allocation.

The focus of this government’s budgets has always been on welfare measures, trying to fine-tune efficiency and equity. For the realization of the former the need of the hour is emphasis on infrastructure development. The allocation made towards this is satisfactory, thanks to KIIFB; now the question is its translation into reality. KIIFB is not an off-budget item but a supplementary to the budget. The government is ambitious about this arrangement and hence announced 679 projects amounting to Rs 53,679 crore.

The worrying aspect is that KIIFB has tendered 347 projects amounting to Rs 13,614 crore till date and started implementation of 269 projects worth Rs 4,480 crore.

It accounts for 8.35% of the amount sanctioned. The budget speech made it clear that KIIFB has given clearance to 675 projects amounting to Rs 35,028 crore of the projects amounting to Rs 54,688 crore undertaken by it. The current budget has fixed the expenses of KIIFB at Rs 20,000 crore. The budget seems to be silent in making creative suggestions to reduce the lag in implementation. The finance minister has succeeded in presenting a balanced budget even during a crisis period through a right tradeoff between development and welfare.

This article was published in The Times of India on February 8, 2020 

Views expressed by the author are personal and need not reflect or represent the views of Centre for Public Policy Research. 

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