Gujarat budget mismatch: While tax revenues suggest rise, spending on people's welfare decelerates

% of actuals to budget estimates

By Our Representative
Facts made available from Gujarat’s finance department show deceleration in spending during the first six months of the current financial year, between April and September 2014. A financial statement, accessed by Counterview, suggests that, while there had been acceleration in revenue collection, this has failed to improve the ability to spend on different projects floated by the Gujarat government for people’s “welfare”. Characterized as “unaudited” accounts, the figures show that, though the tax revenue of the Gujarat government rose from 45.7 per cent of the budget estimates during April-September 2013 to 47 per cent in April-September 2014, this did not impact the ability to raise spending.
The budget estimate for the current financial year, 2014-15, was set at 1,25,285.98 crore, and spending for the first six months of the financial year, if the official report is any indication, was Rs 42,735.02 crore, which is 34.1 per cent of the total . The statement says, as against this, the spending in the corresponding period – first six months of the fiscal 2013-14 – was 38 per cent of the total budget estimate. This suggests that spending this year was four per cent lower than last year.
What is even more interesting is that, while there has not been much of deceleration in the spending for the non-plan sector – which mainly consist of salaries, debt repayment, repayment on interest on principal amount, and other “necessary” expenditure, which the government must incur in order to run the government – as for the plan sector, there was considerable deceleration. The non-plan figure for April-September 2014 was Rs 25,237.41 crore, or 40.8 per cent of the total budget estimates as against 42.5 per cent during the corresponding period last year.
However, as for the planned expenditure, which consists of social sector projects for health, education, social justice and empowerment, water resources, electricity and other infrastructure facilities to the people, the Gujarat government could spend just 27.6 per cent of the total budgeted amount between April and September 2014 – Rs 17,497.61 crore out of 63,475.64 crore budgeted. This is against the actual spending of 32.5 per cent against the budget estimates during the corresponding period last year. This suggests that this year, till September, Gujarat government failed to spend five per cent less amount that what it had estimated compared to last year.
From available indications, the failure to spend collected funds may have happened because of poor budget-making by the Gujarat government. This was noticed by India’s Comptroller and Auditor General (CAG) in its report, placed in the Gujarat state assembly in 2012, which said that the state government’s budgetary allocations were “unrealistic and lacked credibility”, and the deficiencies in financial management included “poor budgeting and expenditure control.” Giving the example of the state revenue department, it said, its expenditures in 2007-08, 2008-09 and 2009-10 were sharply lower than the budgetary provisions.
CAG noted that the expenditure should be “uniformly spread” throughout the year and rush of expenditure during the last quarter and particularly the last month should be avoided. However, scrutiny of records revealed that there were cases of 20 per cent to 100 per cent expenditure being incurred in the last quarter of the year. It also found that allotted amount for specific schemes remained unutilized, and hence “parked”, in the so-called personal ledger accounts of District Development Officers (DDOs).
For instance, CAG said, the state government “failed to distribute” land among beneficiaries under the Gujarat Land Ceiling Act. Then, there were a “huge delay: in providing services to people by e-dhara centres, the IT enable service to land holders. There was also failure to utilize Central funds for updating and modernizing of land records. This indicated inadequacies in preparation of project proposals, slow progress of work as well as inadequate departmental monitoring and supervision, it underlined.

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