Everyone has been eagerly waiting for the state budget 2001-2002 as in the run up to the budget, many austerity measures were being routinely announced. These measures came as a whiff of fresh air in an otherwise gloomy situation. The unassailable majority in the state Assembly and the widespread awareness of the fiscal crisis in the state provided excellent opportunities to take up bold measures. If certain inconvenient decisions are taken with adequate transparency, the affected groups may be willing to bear with the inconvenience in the interest of the larger society. 

Now that the budget has been presented and will be passed undoubtedly, the natural question is - has the budget been able to capitalize on these opportunities? In short, how successfully has the Finance minister capitalized on these opportunities to tackle the basic problems of the state? We cannot expect a non-political budget but the ethos of the approach should be compatible with the basic problems of the state.

According to the FM, a severe financial crisis goes with grave law and order situation. A sound financial system can "evolve only in an environment where there is a feeling of safety and security." It is admitted that widespread corruption in the state's administration has disillusioned the people. There is a frank admission of the parallel government. It is rightly pointed out that the first step towards a sustainable financial system is to bring about structural changes in the composition of the state government's expenditure and effect economy in non-plan revenue expenditure with greater vigor while improving the quality of plan expenditure. As a matter of fact the FM's budget speech is replete with exhortations and calls for sacrifice in the interest of the society.

Before looking ahead, it will be interesting to look at the path just traversed in the form of revised estimates for 2000-2001. The revised estimates of gross expenditure for 2000 and 2001 is Rs 3209.52 crores which is 77 per cent higher than the budget estimate of Rs 1809.10 crores. The reason behind this rise is increased expenditure on payment of pay and allowances, repayment of ways and means advances obtained from RBI and higher expenditure of the centrally sponsored schemes. There was a cut of Rs 25.68 crores in the annual plan outlay.

The raised estimate of revenue expenditure overshot budget estimates by 13 percent and that of capital expenditure by nearly 197 per cent. One cannot help pointing out this stage that the budgeted revenue expenditure in 2000-2001 was Rs 1110.66 crores as stated by the FM. The state's own tax and non-tax revenue increased by Rs 13.35 crores but it was short of target by Rs 30.7 crores. The glorified rise in capital receipt is also suspect as ways and means advances from RBI constitute 91.5 per cent of the capital receipts in 2000-01. The current financial year will close with a deficit of Rs 382.67 crores as against the deficit of Rs 289.07 crores in 1999-2000. This deficit will be left unfilled and can create havoc with state finance in 2001-2002.

What is the thrust of the budget? Information technology, rural credit and infrastructure development in rural areas forms the cornerstones of the budget. An information technology policy of the state will be brought out by the middle of 2001-2002. The state government is waiting for central government approval of the Public Demand Recovery Act, which will ensure that while bank loan defaulters are penalized, the genuine difficulties of the borrowers are taken care by proper rescheduling etc. It is rightly pointed out that credit delayed is credit denied. 

Rural connectivity is sought to be improved under the Pradhan Mantri Gram Sadak Yojna by upgrading existing roads and undertaking construction.
There are no fresh taxation measures in the budget apart from those measures being announced from time to time as part of austere measures. The high growth tertiary sector, particularly hotels, trade and restaurants has been left untouched. Any critical comment of the budget is highly handicapped by the lack of real targets. Spending the earmarked amount or collecting more than the target do not give a clear picture. If the entire fund is used for 50 per cent of the physical target or if the resource have been mobilized by inflicting heavy cost on the economy, both are causes for concern. Our budgets are void of physical targets.

Hence, no balanced comment can be made. However, one cannot emphasize the fact that the current budget reflects a better understanding of our economic problems. The appeal to the insurgents and all sections of the society to join hands in charting out the path of development are in fact encouraging. As the FM has said "a sincere and persistent pursuit of the reforms" with a clear understanding will go a long way in alleviating the financial difficulties of the state.

2000-2001 Budget Estimates (a table)