Falling revenue may hit plans for big schemes in State budget

Chief Minister Siddaramaiah is likely to have very limited elbow room to announce big schemes and projects in his 2015-16 budget with the State staring at a shortfall in revenue collection and alarming increase in non-development expenditure.

The government is expected to fall short of about Rs 1,000 crore in revenue from its own sources in 2014-15 fiscal against the budget estimate. For the first time in many years, the State Excise department is expected to fall short of its target (Rs 14,430 crore) by about Rs 600 crore. The shortfall in the Stamps and Registration department is expected at about Rs 400 crore. This is mainly because of unrealistic targets set by the government.

Sources in the State Finance department said that though the falling fuel prices had hit the State’s revenue, the Commercial Taxes department was confident of making good the loss and reaching its target of Rs 42,000 crore by improving tax efficiency. Commercial taxes are the biggest sources of own tax revenue to the government.

Ballooning non-development expenditure is perhaps the biggest worry for Siddaramaiah, thanks to the number of ‘bhagya’ schemes rolled out by him in the last 22 months: In 2013-14 fiscal, the ratio of revenue receipts (Rs 84,884 crore) and committed expenditure (Rs 80,200 crore) touched the peak of 94 per cent. It was 80 per cent in 2012-13 fiscal. This, as a result, leaves very little scope for allocating funds for new schemes and projects, the sources said.

The committed expenditure comprises salary, interest, pension, subsidy, administrative expenses and devolution to local bodies. Among these, expenditure on subsidy has increased substantially (Rs 7,390 crore in 2011-12 to Rs 17,153 crore in 2014-15). And the ratio is only going to increase further unless subsidy schemes are pruned on priority and steps are taken for additional resource mobilisation in the coming budget, the sources said.

Decline in Centre’s contribution

Though implementation of recommendations of the 14th Finance Commission is estimated to fetch additional Rs 6,000 crore annually to the State by way of devolution from the Centre, it has not cheered up Siddaramaiah. For, he has to brace for reduction of funds for Centrally Sponsored Scheme (CSS) such as the National Rural Health Mission, Sarva Shiksha Abhiyan and Rashtriya Krishi Vikas Yojana. The Centre is expected to cut down its share of funds to CSS by 40 per cent to 50 per cent, the sources said. However, it is left to the State to plan its priorities.

Moreover, the State’s revenue surplus position is under strain. It has in turn hit the capital expenditure, which is the key to taking up developmental projects. Surplus revenue is normally diverted for capital expenditure. The revenue surplus is estimated at Rs 281 crore in the current fiscal, the sources added.

But Siddaramaiah, who also holds the finance portfolio, is under pressure to announce projects for infrastructure development in Bengaluru with BBMP elections round the corner. He also has to please rural populace in the budget as elections to gram panchayats are scheduled to be held in May this year.

Besides, he has to find resources for filling large number of vacancies (estimated 1.25 lakh) in the government departments. Vacancies are hindering the effective implementation of various schemes and programmes.