Union budget turns Odisha budget topsy-turvy; Fiscal deficit soars to breach FRBM benchmark !

Finance Minister Niranjan Pujari planned big outlays assuming State would be getting Rs 39,206.59 crore as Central tax transfer, but Budget 2019-20 puts it at Rs 37,559.98cr

Bhubaneswar: With Odisha going to witness an increase of mere 6 per cent in the net proceeds of taxes and duties as devolution from Centre in 2019-20, this has the potential to make the State FM’s budget 2019-20 calculations go haywire.

As per the Budget 2019-20 tabled by Union Finance Minister  Nirmala Sitharaman,  the State would receive Rs 37,559.98 crore as State’s share in Union taxes. The State was budgeted to receive Rs 36,585.93 crore in 2018-19 and  Rs 31,272 crore in 2017-18. However, in the 2018-19 RE (revised estimates), the State was shown as receiving Rs 35,353.95 crore.

The implication for the State finances post the Union Budget presentation is State Finance minister Niranjan Pujari has planned big outlays for programmes assuming that the State would be getting Rs 39,206.59 crore as its share in Union taxes (Direct, Indirect & Service).

However, the reality is Odisha could be receiving only Rs 37, 559.98 crore as its share under Union taxes. This will lead to a shortfall of  Rs 1,646,61 crore. And this shortfall will leave a gaping hole in State’s revenue surplus and fiscal deficit.

In the 2019-20 budget, FM Pujari has projected a revenue surplus of Rs 6,528 crore on the assumption of Rs 39, 206.59 crore from Centre. Since the State would be receiving Rs 1, 646.61 crore less, the revenue surplus could shrink to Rs 4, 611.39 crore and the fiscal deficit will expand to Rs 20,523.61 crore. And the proportion of fiscal deficit to GSDP will shoot up to touch 3.79 per cent vis-a-vis  the limit of 3.5 per cent under the Fiscal Responsibility and Budget Management Act (FRBM) Act.

Moreover, a glance at the outlay on major schemes didn’t show any significant hikes in 2019-20. Rather, many vital schemes have seen a slash in the outlay.

Among the core of core schemes, where fund proportion share is 90:10, the Union budget 2019-20 shows a slash in umbrella programme for SCs to Rs 5,445 crore from Rs 7,609 crore in 2018-19 RE.

With regard to core schemes, where funding pattern is 60:40, many schemes have seen cut in outlays. For instance, the allocation under Pradhan Mantri Awas Yojana (PMAY) in 2019-20 has been Rs 25, 853 crore vis-a-vis of Rs 26, 405 crore in 2018-19 RE. Similarly, allocation under Swachh Bharat Mission has been slashed to Rs 12,644 crore.  Odisha has to spend more on these vital programmes as the State is lagging nationally, revealed the Eco-Survey 2018-19.
However,  the maiden women Finance Minister’s budget has political implications on the Naveen-led ruling BJD here. CM Naveen has won big banking on doles and incentives to women SHGs like interest free loan, assistance for smart phones et al.

Union FM Sitharaman has announced extension of SHG interest subvention programme to all districts and Rs 1lakh Mudra loan to one woman under every SHG. In addition, a verified SHG member having Jhan Dhan account could avail overdraft facility of Rs 5,000.

Political observers feel this tussle to win over SHGs will become another flashpoint between BJD – BJP in days ahead.

What is SHG interest subvention scheme? At present, all women SHGs in 150 backward districts are eligible for interest subvention on borrowing of up to Rs 3 lakh at 7 per cent rate of interest. And if they pay it timely, they would  get an additional subvention of 3 per cent, thus bringing down the effective interest rate to mere 4 per cent. Now, this facility has been expanded to all districts.