Amit Mitra's Budget: More Missing in Speech than Available Upfront

March 25, 2012  Fb posting
The art of effective public communication is to disclose upfront that convinces the people. Amit Mitra complained that the previous Govt. had left the Statec with an unsustainble debt burden in excess of Rs 20 million crores. That is correct. In the last ten months, he could not bring down the debt burden, it must have increased. Ten months is a short time to reverse a trend: given the past reluctance of the former Finance Minister to be upfront in disclosurers and build an air of sophistication around some clerical financial work, it would take a new minister to know the real health of the State's finances. No one expected him to turn the State around in a year or two. He would have do, 2011ne well by starting an upfront summarry disclosure on the lines suggested in an earlier Note posted here in my Fb page. Better late than never: he should circulate a disclosure sheet while giving his replies at the end of budget discussions that started on Saturday 24th March in the State Assembly of legislators. The Daily newspapers can publish that statement for wider public awareness of the facts than doubting the Budget figures based on opposition critics.




What do we still readily have from his Budget sppech with a Financial Statement hanging lose as part 4 of his speech as given the Finance Department's website?



The Revenue Receipts in the year closing on 31 March 2012 (a few days to go) have increased by Rs12,000 crore as against the increase of Rs10,000 crore in the previous year. But in the next year 2012-13, he budgets for a Rs17,000 increase. How only the Finance Department knows. Good to have a challenging budget for increasing revenues. Maybe his major reforms in tax administration will partly help. Maybe the incidence of tax evasion will also drop.



Mr. Dasgupta had raised Rs7,000 crore more debt in 2010-1i the debt raised he raised in 20009-10. In 2011-12 Mr Mitra mamaged with just Rs 3000 crore of debt than the maximum additional debt raised by Ashimj asgupta in a single year. Mr. Mitra proposes to reduce the fresh borrowingas by Rs 5000 crorers in 2012-13. But difficult to know how much debt he repaid to work out the net impact on the outstanding debt level. He clearly would have paid much less than the amount of fresh borrowings whose receipts are estimated at Rs 46,766 crore in 2011-12 and budgeted at Rs 41596 crore for 2012-13. If he succeeds in achieving these figures he would have made a small first step towards turning the debt situation from the worst to worse.

His revenue account deficit estimates are placed at about Rs17,000 crore in 2010-11 and 2011-12. That is good. No further increase in revenue deficit. He wants now to reduce the revenue account deficit by Rs10,000 crore to just Rs7,000 crore in 2012-23. That is a tall task but what is needed by the State to come out of the debt crisis. All revenue deficits mean a corresponding requirement of borrowing.

Revenue expenditure increased from Rs64,500 crore in 2010-11 to Rs 76,5000 crore in 2011-12. That is a large increase. We do not know yet where did Mr. Mitra find money to fund such a huge increase in revenue expenditure. The Mamata's expenditure spree is evident, but the matching revenue earning effort is not visible yet.

Mt Mitra managed also to nearly double the capital expenditure from Rs,2200 crore in 2010-11 to Rs 3,9000 crore in 2011-12 and budgets for a further doubling to Rs 8300 crore in 2012-13. That would be good job done.

His fresh tax revenue effort will yield him a mere Rs200 crore. Unlikely that he will be able to increase taxes in 2013 - the Panchyat elections are there. But he could count on reducing the subsidies on transport and other public sector undertakings and plug leakages in expenditure along with leakages in taxes.

The rest of his budget speech, about two-thirds of the text confirms that Governments are for spending money of others. However, he increased allocation much more in percentage growth terms to some of the low budget departments that have become critically important. His geographical spread of expenditure seens to be more balanced - reflecting Mamata's inclination to help all geogrphical areas/ regions. That's good.

I hope the 10 finance advisers he posts in 10 major departments are not to accomodoate promotions to some bureaucrats. I hope they serve the purpose of controlling wasteful expenditure, evaluate expemnditure decisions and help the Finance Department guys in enhancing the analytical quality of budget paper documentation.

Good job, could be better next year if hisrevenue forecasts are achieved.