Slumbering govt leaves development lopsided

Public expenditure review reveals shortcomings in States planning

The inability of the successive governments to prioritise expenditure has led to lopsided development in many of the key sectors like education, health, irrigation and energy in the last 10 years in the State.

A review of public expenditure by the Expenditure Reforms Commission (ERC) has revealed that these sectors are witnessing a situation where there are either too many staff or insufficient infrastructure and vice versa.

The education sector, for instance, is facing shortage of teachers though there are a large number of schools and classrooms in the State.

Similarly, the Rural Development and Panchayat Raj (RDPR) department has been able to create assets like buildings over the years, but has insufficient trained staff. Also, the government’s failure to infuse enough capital expenditure in the energy sector has led to the present shortage of power in the State.

The ERC headed by former chief secretary B K Bhattacharya, which has reviewed revenue and capital expenditure before and after passing the Karnataka Fiscal Responsibility (KFR) Act, 2003, has found that revenue expenditure in 2009-10 has more than doubled compared to 2003-04 (2.3 times), while the capital expenditure during the same period has not increased at the same pace (increased by 1.94 times). This has led to lopsided development.

Departments like RDPR, Women and Child Development, Social Welfare, Agriculture, Horticulture and Education witnessed a favourable infusion of capital expenditure and, hence, there has been more asset formation after 2003-04 compared to pre-KFR regime, the ERC stated in its report submitted to the State government recently.

On the other end, capital expenditure in the departments like Energy, Water Resources, Urban Development, Transport and Commerce and Industries, which are key for economic growth of the State, has been lower compared to revenue expenditure.

Though the government has increased allocation for capital expenditure in the last few years to these departments, it is hardly enough to create necessary assets.

Besides, an analysis of the budgetary allocation to departments has revealed that the allocation to these growth-inducing departments has been growing at much lower rate compared those which mainly provide social services.

“In order to ensure growth inducing expenditure, the Finance and Planning departments need to undertake regular studies to identify the sectors which accelerate economic growth and direct its expenditure accordingly as part of its long term fiscal policy,” the ERC has recommended.

B'lore-centric growth

The ERC expressed concern over the slow growth of the Gross State Domestic Product (GSDP) despite Karnataka being a favoured destination for foreign direct investment and a hub of IT industry.

During 2003-04 to 2008-09, the State’s average GSDP growth rate was 8.1 per cent (at constant prices), which is marginally above the all Indian growth rate of 7.83 per cent. However, states like Bihar, Orissa, Haryana, Gujarat and Maharastra have been able to register higher growth rates than Karnataka.

This implies that growth of Karnataka’s economy has been Bangalore centric, and there has not been any significant economic activity in districts outside Bangalore.

The ERC has recommended that the Planning department has to take up a study to identify the sectors which can promote high growth in the State with better regional distribution.

Revenue and capital expenditure of key depts