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Thursday, April 22, 2021

Congress alleges that fiscal deficit is wrongly calculated





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Panaji: Congress Goa Chief Girish Chodankar said that Fiscal deficit is wrongly calculated or we allege is deliberately manipulated.
“Fiscal deficit is actually, the amount of funds required to be borrowed in order to meet the gap of funding capital expenditure. For the year 2020-21, capital spending as per the document “Budget at a Glance” is Rs. 4941.39 Cr and lending is Rs. 70.58 Cr,” he said.
“These represent the basic net capital spending, which amounts to Rs. 5011.97 Cr.,” he said.
Chodankar has said:
From this figure, one needs to reduce the projected revenue surplus and the non-debt capital receipts, which is Rs. 353.61 Cr. and Rs. 9.68 Cr respectively, which adds up to Rs. 363.29 Cr. Thus, in reality, the Fiscal Deficit for the coming year 2020-21 will be Rs. 5011.97 Cr. minus Rs. 363.29 Cr which is Rs. 4,648.68 Cr.
What this represents is  5.04 % of next year projected GSDP of Rs. 92260.53 Cr. and not 2.01 % as mentioned in budget speech and as is manipulated in the “budget at a glance”, by keeping the fiscal deficit as low as, 1856.66 Cr.
Still I want to congratulate our Chief Minister for Undeclared Fiscal Deficit of Rs. 4,648.68 Cr. This is a healthy sign in Economics as it will bring about lot of productive expenditure on capital infrastructure, which in turn will churn the economy and will also generate much needed employment. Mistake or no Mistake CM needs to be complimented. He will indeed borrow more and more and spent on capital expenditure, likewise, which he claims he is doing during this fiscal.

b.​Let us analyze now the Annual Financial Statement. The figures are huge and frightening.
In the Revenue Account, a revenue surplus of Rs. 353.61 Cr., is projected. But, in the Capital Account, there is a deficit of Rs 3373.19 Cr. Capital Receipts including projected borrowings of Rs. 2550 Cr., is only Rs. 2648.88 Cr.; while the Capital Disbursement which includes repayment of principal amount of loans of Rs. 1010.10 Cr., is very high at Rs. 6022.07 Cr. Capital deficit, which is basically Capital disbursement minus capital receipts is Rs. 3373.19 Cr. Thus, Government will fall short of nearly Rs. 3373.19 Cr., less revenue surplus of Rs. 353.61 Cr., i.e. Rs. 3019.58 Cr. This only means, that at the beginning of the next year, the CM is stump down by nearly Rs. 3000 cr. So the estimated Budget Size at Rs. 21056 cr., in reality begins with Rs. 18,000 cr., assuming all revenue conditions are as projected.
I still want to commend the CM for such a bold projection of Budget size figures, when he too well knows that he is down by 3000 cr., even before he stood up to read out his Speech. It does not surprises us Goans, as by now they have realized that whatever comes out of this Governments mouth are all manipulated figures, of hollow achievements.

c.​If one goes further, into the AFS, the picture becomes a horror story. The opening balance is minus Rs. 2566.59 Cr.
Thus as per Annual Financial Statement (AFS) the overall deficit is Rs. 5358.61 cr. So from Rs. 21,056 Cr keeping aside the amount to cover up Rs. 5358.61 cr, the revenue surplus is negated and it is a revenue deficit budget of nearly Rs. 5000 cr.

d.​In an years time, the CM has wrecked havoc with treasury. If I quote the Finance Departments officers, the State is only borrowing to re-pay its debts and to meet essential revenue expenditure, rather than capital expenditure. To re-pay debt, one does not borrow, but utilizes own earnings. In the case of our CM, it is quite the opposite.
Usually, and as per the trends of receipts and expenditure, the revenue receipts touch 75 to 80%, while spending gets curtailed around 65 to 72%. In order to maintain a revenue surplus, the capital expenditure will have to be curtailed to only the amount of borrowing (Rs. 2550 cr.) less Rs. 1010 cr. which is loan repayment of principal amount. Therefore, actual spending on capital will be maximum Rs. 1500 cr. as against projected Rs. 4941.39 cr.

e.​CM says in his Speech that his Govt. has presented a proposal for Rs. 6330 Cr package demand before 15th Finance Commission. Let me remind the CM, that with regards to the net proceeds of the state share in central taxes, what was your last year (2019-20) estimate of Rs. 3058 Cr. has been brought down to Rs. 3026 Cr (2020-21). Having their own Government at the Centre, the state share for the year 2019-20 has been reduced to Rs. 2702 crores, and to add salt to injury, another Rs. 222 crores has been deducted to reduce the share to a paltry Rs. 2480 Cr. Is this not a matter of shame for the CM, who went to present his demand to the Union FM and what he returned back was with a reduced kitty of Goa’s legitimate share? This is the manner how their own CM is treated by their own party in Delhi.

f.​The CM has announced entry plazas at border points to keep a check on entry of vehicles and policing. One must note that almost all States have removed their entry check points after GST and thus, introduction of entry plazas will defeat the seamless movement of the goods, under GST, and give scope for corrupt practices.

g.​The increase in excise on liquor and Import fees on liquor is manifold. Wine manufacturers who are majority Goans will be severely affected. A bottle of local manufactured wine, most commonly used for various functions and cheap yet healthy port wine costing Rs. 80/- will cost around Rs. 92 to 95/-. This will affect the local tourism industry adversely, which is trying to resuscitate itself against the haphazard policies of this Government. A beer which is priced at Rs. 110 will cost around Rs. 122 to Rs. 125, which is just Rs. 12 – 15 cheaper than in neighbouring states. The import fees hiked means certain brands of products will be costlier than similar others.
Cashew feni will cost dearly, it will create problems for local and traditional distillers. The Cashew feni and industry, which achieved the Geographical Indication (GI) patent for the State of Goa, is being systematically hounded by this Government, with such wrong policies and very high excise structure
In IMFL, the CM, by increasing excise duty on commonly consumed medium and lesser priced brands, wants to encourage the consumer to drink cheaper brands which are unhealthy and will adversely affect his health. Government will have to spend more on public health in such an eventuality.

h.​The CM who is searching for revenue sources surprisingly has not mentioned anything on casino fees, renewal fees etc. Your guess and my reading is the same, he wants to keep his and the BJP ATMs very safe.

i.​In the tax proposals, the rates and prices of conversion fees, stamp duty, which CM proposes to increase, are not given. This is deliberately being done, to fill some coffers, may not be the States own treasury, as this will lead to speculation and his revenue officials and certain others will take advantage off. This CM through his Budget Speech is encouraging corruption in his government, rather than concentrating on governance

j.​Many questions are raised about professional tax proposed to be levied and realized by local bodies. There are questions as to on whom will the professional tax be levied and collected? Is it commercial taxes office or local bodies? Is it the same as tax on profession, trade and callings? Will it be the same amount of Rs. 2500 per annum as per the provisions of article 246 of the Constitution of India.? Professional tax in one form or the other already exists in many local bodies in the state.

k.​The economic growth rate for 2020-21 is projected at 8.6 percent. This is down from the last target of 10 percent pronounced in the budget of 2019-20.
​State’s economy in 2017-18 has decreased by half to around 6.23 percent (based on Quick estimate) from 12.49 percent for year 2016-17 (based on Provisional estimate). Similarly, the Economic Survey  2019-20 states that from 11.08 percent growth in 2017-18 it has come down to 9.82 percent in the year 2018-19.

l.​Overall, the budgetary announcements lack vision, devoid of any substance and insipid. In my opinion it is barely a cut, copy and paste job of all old speeches tried to be forcibly pushed in a fiscally tampered bottle. Not surprising that it comes from a CM who himself lacks these and therefore I think, Michael Lobo is right when he says that the cabinet lacks quality.

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