State to tap market borrowings to bridge budget shortfall
Bhubaneswar: With the Center tightening its purse strings in the Union Budget, Odisha government is banking on market borrowings to make its ends meet. Odisha Finance minister Pradeep Kumar Amat has said that given the reduction in grants to the State by the Centre, the State government has to tap market borrowings to meet the shortfall in revenue and allocate the required funds to different sectors.
According to sources, the State government, which will present its budget on March 18, is expected to lay more emphasis on Agriculture, Irrigation, Education, Health and Infrastructure sectors. However, the State government is under financial stress given the fact that it has managed to raise revenue worth only Rs 45, 000 crores till December, 2015 against a targeted collection of Rs 70,000 cr in 2015-16. While the total allocation, both in the general and supplementary budget, was Rs 95,000 crores in 2015-16, it is expected that the amount will be be Rs 100,000 crore or more in the next fiscal.
The State government has already intimated that it will initially present an Appropriation Bill for the first two months of 2017-17 and will follow it up with the general budget.
“We are not receiving the amount that we are supposed to get from the Centre. However, keeping in mind the interest of the people of the State, we will try and manage the budget in a manner to ensure adequate allocation to Central as well as State-sponsored schemes. There are many provisions at our disposal as per Fiscal Responsibility and Budget Management Act (FRBM), which also includes market borrowings,” said ruling BJD spokesperson Samir Dash.
On the other hand, the Centre-State fund-sharing ratio has also changed for Central schemes. The State government has already borrowed Rs 5000 crores from the market and experts believe that it is likely to raise Rs 10,000 crores more.
“Expenditure seems to be increasing, while the picture of revenue collection is not so encouraging. If this persists, then the State government will be forced to borrow from the market. In the current situation, it will be difficult for the State to manage the budget,” opined former Finance minister, Prafulla Ghadei.
“Even if the State government tries, it cannot squeeze the size of the budget given the emphasis required on irrigation, agriculture and other sectors. However, it could manage the same by resorting to borrowings,” said Dillip Satpathy, the Resident Editor of Business Standard.