Development deficit dogs poll-bound states

January 19th, 2012 - 10:37 am ICT by IANS  

New Delhi, Jan 19 (IANS) With high fiscal deficits — an indicator of poor financial management — the five poll-bound states of Punjab, Uttar Pradesh, Manipur, Uttarakhand and Goa, home to about 230 million people, leave very little for development, a report says.

An analysis of budgets of these states, done by the National Election Watch and the Association of Democratic Reforms, shows that good economics ranks low in priority with the governments.

“As most of the revenue spending is on staff salaries, pension and interest, very little is left for development in these states,” Trilochan Sastry, former dean of the Indian Institute of Management, Bangalore, told IANS.

“Politics and development go hand in hand. The voters must demand development from politicians,” added Sastry, who worked on the report.

The highest fiscal deficit is in Uttar Pradesh, amounting to an all-time high of Rs.20,513 crore ($4.06 billion) in 2008-09 followed by Punjab, which recorded a fiscal deficit of Rs.6,690 ($1.3 billion) crore in 2008-09.

A fiscal deficit occurs when a government’s total expenditure exceeds its revenue.

Sastry said Uttar Pradesh, which is inviting the maximum attention, is lagging behind most other states on basic development indicators like health, education and infant mortality.

Similarly, fiscal deficit in Manipur increased three-fold from Rs.217 crore in 2008-09 to Rs.733 crore in 2009-10.

Incidentally, Punjab, perceived as a “rich” state, had an aggregate revenue deficit of Rs.13,580 crore during 2005-2010 while the other four states managed to show a revenue surplus in the same period.

In fact, the bad economics further compounds the problem of the five states.

The report mentions that in 2008-09 and 2009-10, Goa, a tourist hot spot, did not receive any debt waiver from the central government as the state’s fiscal deficit was higher than the prescribed ceiling of 3.5 percent and four percent of the Gross State Domestic Product, a measure of goods and services produced, respectively.

In Uttarakhand, in 2005-2010, the budget projections for revenue deficit and fiscal deficit each year have consistently not been achieved, said the report.

Further, it said that in 2009-10, capital expenditure in Uttarakhand remained unutilised to the extent of 16 percent due to lower disbursement for sectors like education, rural development and irrigation.

Similarly in Punjab, the expenditure on salaries in 2009-10 was 43 percent of the revenue expenditure, exceeding the norm of 35 percent envisaged by the Twelfth Finance Commission.

The size of the five state economies varies widely. While Manipur’s Gross State Domestic Product is Rs.6,767 crore, it is Rs.367,786 crore for Uttar Pradesh.

Manipur and Uttarakhand are Special Category States, which means they get central plan assistance in the form of 90 percent grant and only 10 percent loan in view of their weak economic basis.

The polls to the five states will be held during Jan 28-March 3. Results will be out March 6.

(Amit Agnihotri can be contacted at amit.a@ians.in)

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