Politics Insight News Without Politics
(Pi Bureau)
Virendra Singh Rawat
Economic Writer
The maiden Budget of Yogi Adityanath is short of big ticket announcement for Uttar Pradesh, yet it has managed to display deft fiscal prudence and discipline on part of the government in allocating funds within its resources.
Barring the Rs 36,000 crore allocated towards the crop loan waiver scheme, which had already been passed by the Yogi cabinet on April 4, the Budget had no other major schemes announced barring a few included in the ruling BJP manifesto.
The crop loan waiver had earlier been flagged by RBI, senior bankers and economic experts, especially with similar demands being raised in other states, as impinging upon the country’s collective fiscal discipline and credit culture.
In this backdrop, the UP Budget has estimated lowering of both critical fiscal parameters of fiscal deficit and public debt. Besides, the Yogi dispensation is now technically terming its crop loan waiver as ‘debt redemption’ scheme to indicate strict espousing fiscal discipline.
While, the state fiscal deficit is projected within the Fiscal Responsibility and Budget Management (FRBM) Act stipulation of 3 % at 2.97 percent, the public debt is pegged at 28.6 percent below the standard 30 % mark.
Over the years, both these parameters had been hovering above the stipulated marks in UP, showing poor fiscal planning and expenditure beyond the financial resources.
UP is the country’s third largest economy, contributing 8.4 percent towards India’s Gross Domestic Product (GDP). Its Gross State Domestic Product (GSDP) is estimated at Rs 14,45,770 crore (current prices) during 2017-18, up 15.8% from Rs 12,47,658 crore in 2016-17.
UP additional chief secretary (finance) Anup Chandra Pandey has said the crop loan waiver was actually ‘debt redemption’, under which the state government would redeem loans out of its resources and not resorting to floating of bonds, which would have required debt servicing (interest payment) until liquidated after a period of time.
Under the previous Akhilesh Yadav government (2012-17) in UP, the fiscal deficit had more than doubled during from 2.64 % in 2012-13 to 5.32 % in 2015-16, before cooling off to 4.04 % in 2016-17.
Although, during 2015-16 and 2016-17, the state had issued bonds to power distribution companies (discoms) to the tune of Rs 29,602 crore and Rs 14,801 crore (revised budgetary estimates) respectively under Ujwal Discom Assurance Yojana (UDAY) for the recapitalisation of financially broke discoms.
As per the central government criterion, this outlay had been kept outside the purview of the FRBM parameters for the sake of accounting. Excluding this, the fiscal deficit during 2015-16 and 2016-17 would have looked better at 2.63 % and 3.22 %.
However, the discom scheme is applicable to all the states and the discoms’s accumulated losses were proportional to the poor planning and lax governance under the previous successive regimes.
