State needs a solid growth plan to boost revenue

May 20, 2013, 07:45 IST | Ravikiran Deshmukh

It is imperative for a state to come out with its annual statement of development, referred as the annual plan

It is imperative for a state to come out with its annual statement of development, referred as the annual plan. The Planning Commission of India, headed by the Prime Minister, approves it only after going through the state’s capability to raise finances to meet expenditure for undertaking development projects.

If the state is unable to raise required finances through its annual budget or has lost credibility for open market borrowings, the commission refuses to approve the plan. In such an event, the union government funding for various projects and schemes in the state also gets severely affected.

The state’s annual plan for the current fiscal 2013-14 is pegged at Rs 49,000 crore. It was approved on May 16 by the commission. Of the total amount, Rs 23,000 crore will be raised through the open market borrowings. Effectively the state will provide just half the amount from its kitty. The Centre will share some amount for its schemes. It should be noted that the state has, in recent years, not been able to spend the entire amount committed through the plan.

Today, the state’s revenue income is Rs 1.44 lakh crore as per the 2012-13 figures. Next year the state hopes to raise Rs 1.56 lakh crore. Despite burgeoning resources the state is unable to spend a sufficient amount on development mainly due to its huge expenditure on salaries and pensions of government employees and repayment of loans.

The state is now caught in a vicious circle, as except in the service sector no significant growth is visible in sectors like agriculture and industry. Even as the state has registered 10 per cent of the industrial investment in the country, it’s not enough to fill the huge void created by the state’s failure to contain its non-plan expenditure of which a whopping 48 per cent amount will go towards salaries and pensions.

Last year, it was 47 per cent and going upwards every year. Last year the state spent 14 per cent of its income on payment of interest and 9 per cent on subsidies for various purposes.

Even if it is presumed that such expenses were unavoidable, the state must register growth in various sectors to keep its cash registers ringing. One of the most worrying signs is the state’s dwindling ratio of growth in agriculture which is now -2.1 per cent compared to a robust 11 per cent of the neighbouring Gujarat. It’s going to be the biggest challenge for the state to reverse the performance, as 70 per cent of the state population is dependent on agriculture.

So, have there been any serious efforts to improve the agro-based rural economy? Sadly, no. Only six districts - Mumbai city, Mumbai suburbs, Thane, Raigad, Pune and Nagpur — have maximum per capita income. These districts in general and Mumbai Metropolitan Region (MMR) in particular offer a huge revenue to the state. Their contribution is mainly due to the business and services sector. The state needs to pay serious attention towards agriculture but a few examples prove otherwise.

Since 2009, the state planning board that drafts the state plan and the five-year plan is non-functional thanks to the Congress-led government’s inability to nominate members. As per the norms, the board with experts from agriculture, education, social sectors and industry works on the state’s requirements.

Various study groups submit their reports, which help draft the plan.

The board is headed by the chief minister, and consists of an executive chairman and expert members. Today, except the CM the board has no members and the deputed officials are sitting idle. As a result the state plan has been drafted by babus at Mantralaya and submitted to the planning commission.

Another serious negligence has been towards the agricultural universities. The state council for agricultural education and research that controls the universities is headed by the state agriculture minister, and has a vice-chairman to handle day-to-day affairs. Since the last four years, the state has been unable to make it clear if the present incumbent to the vice-chairman’s post has been re-nominated after expiry of his term four years ago.

Mr Vijay Kolte, an NCP man and board vice-chairman with a minister’s status, still visits the council office in Pune but his office, managed by an IAS-rank officer, does not refer any file to him. The dispute has taken a toll on recruitment at four agriculture universities in the state and today more than 40 per cent posts are vacant.

The ICAR gave its approval for a project under all India coordinated research projects at Dapoli agriculture university. The state is expected to share 25% funds while 75% given by ICAR. Since almost six months the state has not given its consent to bear the cost and the project is yet to take off.

In all, overall development of the state is taking a back seat and the government also lacks required seriousness the plan.

— The writer is Political Editor, MiD Day 

Go to top