When Odisha’s Finance Minister Niranjan Pujari presented a supplementary budget of Rs 11,200 crore, many were surprised over the enhanced size of the state’s budget.
Earlier, he had presented a Rs 1,50,000 core annual budget for the 2020-21 fiscal on February 18. Now the state’s budget size stands at Rs 1,61,200 crore. After presenting the annual budget, Mr.Pujari was hopeful about the utilization of allocation by the different departments during the fiscal.
However, the latest appraisal on spending reveals that as on 20 November, expenditure made by the departments stand at a measly Rs.64,000 crore. That leaves only four months in which to utilize the remaining amount, officials admit.
Now, in the first supplementary budget, Mr.Pujari has provided additional Rs.11,200 crore, and he did not curtail the budget as he expected that the departments would get more fiscal space for spending with more funds available with them.
If in 8 months the departments have been able to spend only Rs.64,000 crore, how can one expect that they will be able to spend nearly Rs.1,61,200 crore? If the departments will be able to spend Rs.10,000 crore in a month, the total spend by them would add up to another Rs.40,000 crore or maximum Rs.50,000 crore by end of the fiscal. So by end of the fiscal, total spending will be around Rs.1 lakh crore leaving behind about Rs 61,000 crore unspent.
Why are the government departments not able to spend money available for development? One may presume that since 15 March the havoc caused by COVID-19 pandemic, with frequent lockdowns and shutdowns, acted as a roadblock on spending of program expenditure.
One will also agree that due to adverse impact of lockdowns and shutdowns expenditure nosedived during 2020-21. But this presumption falls flat if one compares the trend prevailing in the previous years when there was no COVID-19?
For an example, over the last several years it is observed that the amount surrendered at the end of fiscal is more than allocated in the supplementary budget. During 2016-17 supplementary provision was made at Rs 5,151 crore and the surrendered amount was Rs.6,834 crore.
This was repeated in 2017-18 with allocation of Rs.6,813 crore in supplementary budget and a surrendered amount of Rs.7,102 crore. In 2018-19, supplementary provision was Rs.9,611 crore and amount surrendered was Rs.10,947 crore.
And in 2019-20, supplementary allocation was Rs. 8,126 crore and one will be astonished to see that Rs.14,488 crore was surrendered without spending.
In fact, Comptroller and Auditor General (CAG) has repeatedly commented adversely over such action and advised the State Government to be careful about recurrence of such trend, which is detrimental to the interest of the state’s fiscal health.
As the private sector spending in Odisha is poor, the state economy mostly depends on the Government’s spending, as it has multiplier effects. In the pandemic, the financial condition of the people has been adversely affected and more spending by the Government would have boosted up the economy.
Common people like farmers, workers, and others are facing acute situations. Keeping this in view, the Department of Finance has not squeezed the budget but has infused more funds instead.
And the State Government has allowed all projects to be continued during COVID pandemic so that completion of the projects would be achieved in a time bound manner.
As more funds are pumped in capital expenditure, completion of projects in time will yield dividends for the people. It the projects are not completed in time, then cost escalation will ensue which will harm the state’s economy.
So, monitoring mechanism is required to be activated. It is abundantly clear that proper monitoring is absent, and that is why utilization of Budget allocation is poor and more and more funds are surrendered at the end of each financial year.
Because of this, the purpose of having bigger budgets every year is defeated and underutilization of allocation leaves the State in a dire situation.
Then, should the government, which aimed to emerge as the one trillion dollar economy, meet its goal? Chief Minister Naveen Patnaik in a tweet on 13 July, 2019 said that mineral-based industries in the state along with sectors like MSME, agriculture, women entrepreneurship will play important roles in making Odisha a one trillion dollar economy. The economics experts now raise doubt whether the state can reach half of Naveen’s projected level if the departments spend allocation in the prevailing pace.
A report jointly prepared by the JSW Group and PwC India, was released by Naveen. "Odisha will take a central role in driving national growth as a manufacturing hub," he added.
The report has also pointed out that the global economy has grown over three times in the past three decades and it is projected that it could grow more than double in size by 2050.
"The potential of mineral-based industries in Odisha along with other sectors like agriculture, food processing, creative industries, MSME, women entrepreneurship will play an important role in making Odisha a one trillion dollar economy," the report further said.
Industrialist Sajjan Jindal while describing Odisha as the "Hidden Gem of India" emphasized the role of regional economies in making India a 10 trillion dollar economy.
All said and done, the manner in which the State Government departments are moving, such lofty expectations can hardly be met. Therefore, it a collective responsibility and teamwork of the entire government to ensure that the departments spend the entire amount available with them. They should also seek more funds for spending rather than surrendering the allocated funds.
The Chief Secretary Asit Tripathy has time and again harped on timely completion of projects and advised for fast tracking the same. However, other secretaries are required to take the matter seriously and they should work in a determined manner to spend more on programs, so that the budget amounts are spent properly. Experts feel that the secretaries should be given incentive for proper utilization of the budget allocation in a time bound manner.
When there are funds available and the State is within its borrowing limits then the spending machineries should be accelerated, so that higher allocations are utilized in order to boost the COVID-19 ravaged economy of the state.