For the game-changer schemes like KALIA, BSKY, Aama Gaon, Aama Bikas and the sops to SHGs, the budget 2019-20 has to arrange around a whopping Rs 53,000 crore.
In addition, the budget 2019-20 has to allocate another around Rs 35,000 crore so as to provide the matching grants for the centrally sponsored schemes like National Rural Health Mission (NRHM), National Urban Health Mission (NUHM), Ayushman Bharat, Sarva Shiksya Abhiyan (SSA), RUSA et al.
It needs mentioning that the Budget 2018-19 had made provision of Rs 62,000 crore for both the State and Central schemes. The budget had appropriated a sum of Rs 34,770 crore for State schemes and Rs 27,230 crore for the Centrally Sponsored Schemes (CSS). Top sources in the Finance Department revealed that the total allocation for the schemes in 2019-20 will see a nearly 42 per cent spike.
Sources further disclosed that the departments like Health, Rural development, Drinking water, Agriculture, Housing & Urban Development department have placed huge fund requirements in order to meet the needs for the host of schemes these departments now administer.
In the budget 2018-19, the agriculture department had seen the maximum rise of around 25 per cent in allocation; whereas the maximum drop of around 27 per cent in allocation was witnessed in the Rural Development department.
The pet programme of CM Naveen Patnaik 'Aama Gaon, Aama Bikash' had seen allocation Rs 1,250 crore in 2018-19 budget, the budget 2019-20 will hike the allocation for the scheme to around Rs 1,900 crore, sources informed.
Why the State Finance Department is in a huddle? As State has a little elbow room to effect a rise in State's own resources in such a short span of time, the Finance department has to meet the fund needs via market borrowings, central grants and central tax devolution only.
The nagging fact for the State Finance department is the ballooning of debt repayment. Sources informed that the debt repayment in 2019-20 will touch around Rs 11, 690 crore vis-a-vis of Rs 9,657 crore in 2018-19. Rising debt liability is not a good sign in prudent fiscal management.
It's in this context the missive of Chief Secretary Aditya Padhi to CEO Ayushman Bharat for tweaking in the grant-in-aid for Odisha health sector assumes significance.
A check-out out here looks all the more imperative because, Odisha had fared poorest among the 19 major States in spending on education vis-a-vis the total budgeted expenditure.
As per an analysis of the budget data available, the expenditure on education in proportion to the total budget spending for the period of 2016-19 was around 14 per cent. The expenditure proportion for the successive years {2017-18, 2018-19 and 2019-20 (interim)} was 15.5 per cent, 14.8 per cent and around 15.08 per cent, respectively.
Even, the proportion of edu spending to total expenditure by backward States like Bihar and Chhattisgarh in 2018-19 was 18.9 and 18.2 per cent, respectively.
As per the RBI data, the average expenditure on education in proportion to the total budgeted expenditure by major 19 States was 16.1 per cent for the period 2016-19.
A look at the RBI data revealed that the proportion of edu to total spending in Odisha had nosedived post 2000-01 and continued till 2008-09. After a brief rise in 2009-11, the edu spending was again on the downslide till the year 2018-19.
In the Interim Budget 2019-20, the total allocation provisioned was Rs 19, 911 crore. While the allocation for School and Mass Education sector was Rs 16,400 crore, the Higher Education Department was allocated Rs 2,375 crore.
However, the administrative expenditure accounted for around 60 per cent of the total education expenditure in the State.
The worry is such a high proportion of administrative expenditure will in no way add to the quality of education services in the State.
And the result is simply disastrous. A whopping 78 per cent elementary schools in Odisha are without electricity connection. Despite so, during the period 2016-19, not a single school was brought into the loop of electricity connection.
The contrast on other hand is, nationally, a high of 61 per cent elementary schools have the privilege of power connection.
Similarly, In comparison to nearly 90 per cent electrification of secondary schools nationally, it is only 70 per cent in Odisha. The proportion in higher secondary stood at 93 per cent to 87 per cent.
Teacher vacancies: Though there is no teacher vacancy in elementary schools thank to Sarva Shikshya Abhiyan, the teacher vacancies in
class 9th and 10th were at a high of 1,033. As per Rashtriya Madhyamik Shikshya Abhiyan (RMSA) for secondary schools, the total teacher and headmaster vacancies in State's secondary schools were at a whopping 4,919 in 2017-18.
The RMSA data shows Odisha is 5th in teacher vacancy and 6th in Principal vacancies in the country.
As per the budget document tabled, the budget 2019-20 has pegged the revenue surplus (Revenue receipts - Revenue expenditure) at Rs 6,528 crores. This is a drop of nearly 38 per cent from 2018-19 budget estimates.
Similarly, the Fiscal deficit (Total receipts - Total expenditure) for the year 2019-20 has been pegged higher at Rs 18, 877crores. This has shown a big jump of nearly 35 percent.
In another vital indicator of Primary deficit ( Fiscal deficit - Interest payments), the value has widened. The Budget 19-20 pegged the primary deficit at Rs 12,377 crore, which is up by a whopping 53 per cent.
The deterioration of the three vital indicators show that while the revenue expenditure has increased, and as the revenue receipts failed to meet the rise in spending, the State government banked heavily on higher borrowings. For which, the fiscal deficit has risen and so too the primary deficit. And the debt stock and the interest payment number.
Though the budget 19-20 estimated a GSDP growth rate of 8-8.5 per cent, the canons of public finance states that GSDP growth without rise in debt proportion make it qualify as a qualitative growth. The policy decision of FM Pujari to kick start a higher growth by borrowing fails the quality test of public finance.
As per the budget document, the debt stock of the State has zoomed to Rs 1.06lakh crore in 2019-20. The debt stock of the State has clocked a high of 21 per cent. The consequence is debt stock proportion to GSDP touched 19.7 per cent.
More dismal facts: The total pegged debt stock is 92 per cent of the revenue receipts, and the interest payments account for 5.5 per cent of the revenue receipts.
Debt servicing looks precarious as the total borrowings pegged in the budget 19-20 have been Rs 22,584 crore, which is almost a whopping 99 per cent of the total capital receipts. As per debt servicing canon of public finance, this is considered quite dangerous.
A look at the revenue receipts of the State reveal that State's own tax and non-tax revenues together account for mere 39 per cent of its total revenue receipts for the year 2019-20. This shows central tax devolution and grant in aids provide a whopping 61 per cent of the total revenue receipts of the State. This aspect highlights how far Odisha is dependent on central revenue to fund its scores of schemes.
The giant effect then is, the per capita expenditure on rural development in 2019-20 has slipped to mere Rs 1,316 based on 2011 census of 4.2 crore population vis-a-vis an average of Rs 1,711 for the period 2015-19. Even, when the projected 2018 population of 4.65 crore in 2018 is taken into account, the per capita expenditure on rural development comes at mere Rs 1,399.
It is worth mentioning here that Odisha is the third highest populated (rural) State in country after Bihar and Assam.
However, when contrasted with neighbouring States like Jharkhand and Andhra Pradesh having rural population of around 78 per cent and 72 per cent, respectively, the per capita rural expenditure were pegged higher at Rs 2,461 and Rs 2,298, respectively in 2017-18.
Similarly, neighbouring States like Chhattisgarh and West Bengal with rural population of 80 per cent and 72 per cent, respectively, had per capita rural expenditure at Rs 1,746 and Rs 1,763, respectively, in 2017-18.
As per the budget announcements, the total allocation for rural development in 2019-20 is Rs 5, 531 crore against Rs 5,582 crore in 2018-19. The expenditure on rural development in 2016-17 actuals was Rs 7, 275 crore.
An analysis of total expenditure on rural development as a proportion to total budgeted expenditure for the period 2011-15 and 2015-19 revealed that the proportion was around 5.8 per cent for the period 2011-15, which then shot up to 9.7 per cent of total budgeted expenditure for period 2015-19.
While Odisha has increased the proportionate spending on rural development by 3.9 per cent during the period 2015-19, two successive cuts in spending may turn the clock again for the State.
Nationally, Nagaland with 82 per cent rural population had recorded the highest increase of 7 per cent in 2015-19.
As State’s expenditure on rural development meant allocation of matching grants for all rural schemes like PMGSY, Rural water supply programmes, Deendayal Antyoday Yojana, Deendayal Upadhyaya – Gramin Kaushal Yojana (DDU – GKY), MGNREGA and Swachh Bharat Mission, it may have a direct impact on State's objective of reducing poverty and boosting rural employment, observed experts.
The State had witnessed an embarrassing situation in Gumdumaha over killing of innocent tribals only 2-years back as the SOG had then open fired at them assuming as Maoists. The reality was the innocents were trapped by the kuccha road there.
Every day, scores of expectant mothers or critically ill patients are seen carried on a sling or a cot as they are unable to avail the much touted doorstep service 108 ambulance for the lack of proper approach roads in the rural lands of Odisha.
Significantly, the Economic Survey 2018-19, released by the state government two days ago, has claimed that 82.9 per cent villages in Odisha avail all-weather road connectivity. But the reality check on ground presents a different picture.
According to Nabard, which provides assistance for rural roads to Odisha under RIDF (Rural Infrastructure Development Fund) data, a whopping 47 per cent of rural habitations in State have no all weather roads.
The truth is State Government has laid all weather approach roads to nearly 82 per cent villages, but the real picture is nearly half of the rural habitations lack all-weather or motorable roads.
Even, the progress of road networks under the Integrated Action Plan (IAP) for the left-wing hit districts is worse. Data till 2017-18 reveal that only 30 per cent of sanctioned roads under PMGSY in 18 IAP districts were taken up.
Despite such grim situation, the Budget 2019-20 has provisioned mere Rs 162 crore for Rural Roads and Bridges. And the budget speech didn't even mention about rural roads, except about allocation for Pradhan Mantri Gram Sadak Yojana (PMGSY). In 2018-19, the allocation under the head rural roads and bridges was mere Rs 147crore.
In contrast, the State Finance Minister allocated a whopping around Rs 129 crore for the Biju Yuva Vahini in 2019-20 - State's sub-scheme to boost youth empowerment. Political observers view this a government scheme to augment capacity of the BJD cadre base.
Recently, in a reply to a question, the Sports and Youth Department Minister Tusharkanti Behera submitted a written reply in the House. It showed while in 2018-19, the allocation towards programme expenditure for the Biju Yuva Vahini was a whopping around Rs 192 crore, and total amount released during the year stood at Rs 124.5 crore. The allocation for the fiscal year 2019-20 has been pegged at around Rs 128.87 crore.
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.