Post News Network
Bhubaneswar, March 4: Poor central allocation coupled with fall in own revenue collection have posed a challenge before the state government in framing next fiscal’s budget and may compel it to rationalise expenditure on certain heads.
As per officials of the Finance department, the state government’s receipt from the Union Budget will be reduced by Rs 4,600 crore as the centre is allocating less funds than the amount recommended by 14th Finance Commission.
“While the 14th Finance Commission recommends Rs 31,158 crore of allocation for Orissa in 2016-17, the Centre has decided to allocate Rs 26,567 crore. As receipt amount will be lower by Rs 4,590 crore, it will be adjusted from the state exchequer next fiscal,” an official said.
Also, change in centre-state sharing pattern for various schemes will continue to pinch the state kitty for the second year in row. Notably, earlier contribution pattern of 90:10 has been altered to 60:40 and 75:25 has been changed to 50:50 ratios, inflating expenditure of the state government.
Meanwhile, fall in state’s own tax revenue due to slowdown seen in mines and mineral based industries have put the state government in a fix. As per officials, shortfall in revenue collection due to slowdown of mining sector since two years certainly reflects in budget dynamics. The state government has collected revenue worth only Rs 45, 000 crore till December, 2015 against a targeted number of Rs 70,000 crore for this financial year. According to experts, it would be highly difficult for the state government to reduce the size of the budget given the emphasis on agriculture, irrigation and energy sectors.
Meanwhile, the state government has chosen the path of market borrowing to tide over these revenue shortfalls this financial year and is likely to tap this route next fiscal. It has borrowed Rs 5, 000 crore till date as of now. However, experts have flagged up concerns over rising debt burden if market borrowing is tapped as the route to meet shortfall.
State’s debt burden, which was Rs 3, 870 crore during 1989-90, has seen a multifold rise in two and half decades. It is expected to touch around Rs 56,000 crore by the end of 2015-16 and may cross Rs 70,000 by the end of 2018-19 if the current trend of borrowing is followed.
On this backdrop, Chief Secretary had earlier said that various schemes and programmes under state plan would undergo change and would be adjusted as per state’s need in the coming budget.
Meanwhile, the state budget for the next financial year will be Rs 95,000 crore as per the draft budget document, which was approved by the state cabinet Friday. The number indicates that the state is likely to follow a path of fiscal prudence and focus on living within its means than resorting to market borrowing going ahead.