2002-2003 Budget Speeches

SPEECH OF SHRI OKRAM IBOBI SINGH
CHIEF MINISTER (IN-CHARGE FINANCE)
"INTRODUCING THE DEMANDS FOR GRANTS 2002-2003"

Mr. Speaker Sir,

I rise to present the budget of the Government of Manipur for the year 2002-2003. I also lay on the table, the Revised Estimates for the year 2001-2002 and the Demands for Grants.

1. At the very outset, Mr. Speaker Sir, I take this opportunity to thank the people of Manipur for giving me the onus of serving the people of Manipur and the responsibility of presenting the first budget of the Secular Progressive Front Government before the august House.

2. The financial crises which the State had faced during the last few years, continues and I, without mincing any words venture to say that the situation had further deteriorated and will continue to deteriorate if urgent preventive and corrective measures are not taken. Past Governments have taken steps to halt this and further steps need to be taken to contain the problem and come out of it. The path is strewn with thorns but the fruit will be sweet. There are no short cuts.

4. We are still faced with the twin problems of a grave law and order situation on the one hand and severe financial crisis on the other. The State alone cannot bring in economic development and needs the support of private investments for which there is a need for security of life and property. Hence, peace and stability in the State is of paramount importance. Further, the system of permit raj has to go with the State involving more in governance and the private individuals taking up the responsibility of entrepreneurship. The menace of corruption needs to be totally uprooted, for which the Government need the full support of the public. My Government will strive for more transparency in its decision making process.

5. Mr. Speaker Sir, the State’s financial health at this juncture is extremely precarious. The mis-match between our resources and expenditure is too glaring and it is depressing to see that it is also widening at too fast a pace. The growth in expenditure outstrips the buoyancy of receipts. The State continues to reel from the impact of the payment of salaries at Central Government rates on the recommendation of the Vth Pay Commission. The various austerity measures taken up by the State, which many felt was too harsh, had to some extent curtailed the expenditure, but still the gap between receipt and expenditure continues. If this gap is not bridged, the State will be on the brink of financial disaster.

6. The year 2001-2002, had seen a host of turmoil in the State. The mass agitation after the extension of cease-fire without territorial limit, and the general strike by the various employees associations demanding restoration of various perks, had taken a heavy toll on the economy of the State. With the grace of God, we are now marching ahead and I hope that 2002-2003 will be a more auspicious and prosperous year.

7. Mr. Speaker Sir, the opening deficits have been rising steadily from (-) Rs. 289.07 crores in 1999-2000 to (-) Rs. 305.05 crores in 2000-2001 to (-) Rs. 442.33 crores in 2001-2002. It may be remembered that in 2000-2001, the State was unable to pay salaries and pensions for 12 months, and salaries and pension for 11 months only was paid. The above figures give a thumb rule guide to the deteriorating financial position of the State.

8 The current financial year 2001-2002 started with the burden of an opening deficit of Rs. 442.33 crores and this caused acute liquidity problems and extreme difficulty in managing the ways and means of the State. The State could start its transaction only by availing a Special ways and means advance of Rs. 253.00 crores in April 2001 from the Centre.

9. The State continues to avail huge overdraft facilities with the RBI. As a result, the RBI has been constrained to suspend the transaction after 12 days of availing overdraft or 5 days after the overdraft has crossed the normal Ways and Means limit of Rs. 38.00 crores. During 2001-2002, there were instances where there were no transactions in a few months. The gravity of the liquidity problem can be judged by the fact that during 2000-2001, the total number of days on overdraft is 289 days, but during 2001-2002, till February, 2002 the number of days on overdraft is 305 days. This liquidity problem is not sustainable and as we are all aware, salaries cannot be paid regularly every month.

10. Another alarming feature is the rise in debt liabilities of the State Govt. As on 1st April 2000, the total debt liability on account of Internal Debt, Loans and Advances from the Central Government and Small Savings, Provident Fund etc. was Rs. 1211.92 crores, which rose to Rs. 1354.43 crores on 1st April, 2001 and is likely to further rise to about Rs. 1500.00 crores by the end of this financial year. This shows that the revenue expenditure is partly financed by borrowings, and the State is on the brink of the Classical debt trap.

11. Mr. Speaker Sir, I had highlighted a gloomy picture of the financial health of the State and this calls for urgent positive intervention to mitigate the problem. The State had taken a number of measures to reduce the Non-Plan revenue expenditure including freeze on fresh appointment excepting in Police and Jails, rightsizing the various Departments by identifying 14,385 posts which will stand abolished once the incumbent vacates the post, freeze on all adhoc appointments, etc. Steps have also been taken for winding up/downsizing the various Government companies. Besides, a number of measures for mobilizing additional resources have been initiated by rationalizing or revising the tax and user charge structures.

12. In pursuance of the recommendation of the 11th Finance Commission, the State has taken up steps for the Medium Term Fiscal Reform Policy and discussion was held in December 2001 with representatives of the Ministry of Finance and representatives of the State Government to evolve the road map for fiscal restructuring. An MOU will be entered into after a consensus is reached. This will be a critical document as its implementation can usher the State to financial freedom.

13. With the scarce resources available, it has become imperative that these resources are utilized in the most cost effective way. Involvement of local bodies and local people in implementation of Schemes is one of the ways of reducing cost. My Government will try to involve grass root bodies in developmental activities.


Revised Estimates 2001-2002:

14. Mr. Speaker Sir, it is in this scenario of acute financial stress that I now present the Revised Estimate for the year 2001-2002.

15. The Revised Estimates of gross expenditure for the year 2001-2002 is Rs. 3056.97 crores as against Rs. 2434.57 crores in the Budget Estimates. The reason for the increase has been explained while introducing the Supplementary Demands for Grants for 2001-2002.

16. The tentative Plan Outlay of the State reflected in the Budget Estimates for 2001-2002 is Rs. 375.21 crores. The Plan outlay was finally approved at Rs. 520.00 crores and a provision of Rs. 526.87 crores is reflected in the Revised Estimates after incorporating provisions for Projects financed from Non Lapsable Pool of Central Resources and Additional Central Assistance received in 2000-2001 but was not spent. A sum of Rs. 1503.66 crores was in the Revenue Account and Rs. 1553.31 crores in the Capital Account.

17. For Centrally Sponsored Schemes and other sponsored Schemes under NEC, NCDC etc. the revised outlay now stood at Rs. 136.32 crores against the original Budget Estimates of Rs. 69.90 crores; Rs. 104.06 crores in Revenue Account and Rs. 32.24 crores in Capital Account.

18. On the non-plan side, the original Estimates of Rs. 1989.45 crores in the gross Expenditure has risen to Rs. 2393.79 crores in the Revised Estimates for 2001-2002. In the Revenue Account Rs. 1204.71 crores is provided while in Capital Account the provision is Rs. 1189.08 crores.

19. The Revised Estimates of overall receipt is pegged at Rs. 2769.49 crores against the Budget Estimates of Rs. 2203.80 crores, showing an increase of Rs. 565.69 crores.

20. The State’s own tax and non-tax Revenue reflected in the Revised Estimates are Rs. 96.97 crores against the actual of Rs. 76.69 crores during 2000-2001. The Capital Receipt is Rs.1337.51 crores including Rs. 800.00 crores of ways and means advance from the Reserve Bank of India in the Revised Estimates as against Rs. 983.64 crores in the Budget Estimates, showing an increase of Rs. 353.87 crores.

21. There is an increasing burden on the debt services. Against a Budget Estimates of Rs. 158.84 crores for payment of interest it rose to Rs. 177.20 crores in the Revised Estimates. Similarly for repayment of borrowing, against the original Estimates of Rs. 852.23 crores it has risen to Rs. 1179.92 crores in the Revised Estimates.

22. With the Revised Estimates of expenditure and receipts during 2001-2002, the year is expected to close with a deficit of Rs. 593.30 crores. This is against the closing deficit of Rs. 442.33 crores for the year 2000-2001.


Budget Estimates 2002-2003:

23. I shall now present the Budget Estimates, 2002-2003. As the august House is aware, the Planning Commission has not yet finalized the Annual Plan Outlay for Manipur for 2002-2003. The provisions made under Plan Head are, therefore, purely tentative. These are proposed to be revised through Supplementary Demands when the State’s plan Outlay is finalized. And hence I shall refrain from going into the details.

24. The total receipts for the year 2002-2003 are estimated at Rs. 2670.42 crores exhibiting a decrease of Rs.99.07 crores over the Revised Estimates 2001-2002. Out of this, the revenue receipts are estimated at Rs. 1323.99 crores and Capital Receipt at Rs. 1346.42 crores. The Revenue Receipt shows an increase of Rs. 107.98 crores over the receipt of Revised Estimates 2001-2002. The revenue receipts include devolution of Central Taxes and Duties, Statutory Grants etc. as per the norms laid down by the Eleventh Finance Commission.

25. State’s own tax and non-tax receipts are estimated at Rs. 61.75 crores and Rs. 49.37 crores respectively. There is an increase of Rs. 7.41 crores and Rs. 6.74 crores respectively over the Revised Estimates 2001-2002.

26. The revenue expenditure (gross) is estimated at Rs. 1433.41 crores. On the Capital Account the gross expenditure is estimated at Rs. 1452.00 crores.

27. Taking into account the overall transactions, the year 2002-2003, is expected to close with a deficit of Rs. 680.95 crores.

28. Mr. Speaker Sir, with resources too scarce for taking up any meaningful projects, my Government will continue to explore the possibility of taking up projects with foreign assistance. We will lay stress on completion of the ongoing Externally Aided Projects to bring in confidence of the funding agencies.

29. With the coming to an end of the 9th Plan in 2001-2002, from 2002-2003, all plan posts excepting those of the three ongoing Multipurpose Projects of Khuga, Thoubal and Dolaithabi have been transferred to Non-Plan. The total cost of these plan posts transferred is about Rs. 51.15 crores. With these transfers, more funds under plan will be available for developmental activities.

30. In respect of CSS, CPS, NEC, NCDC Schemes, a provision of Rs. 97.59 crores is reflected. This is purely tentative and the actual provision will be based on the approval and releases made by the funding agencies.

31. As the detailed consideration of the Demand for Grants would take sometime, I propose separately to move a “Vote on Accounts” for Grant of expenditure covering the first four months (April to July) of the financial year 2002-2003, so as to enable the State Govt. to carry on its activities from the 1st April, 2002.

32. With these words, Mr. Speaker Sir, I present the Budget Estimates for 2002-2003, with a hope that the same will receive approval of the august House.