Assam State Budget: Poverty of imagination

A student trained in economics and political economy knows what to read on a reasonable and good budget. First, one needs to understand how best a government plans to use its resources and generate revenue. Secondly, what are the plans of the government for the expenditure of this revenue and resources? Thirdly, what are the long term projects and policies which can fundamentally infuse dynamism into the economy and general well-being of the people? Finally, if there is a gap between the government’s earnings and expenditure and which leads to borrowing, is the government in a position to pay back this loan in a reasonable manner.

How does then one can explain the Assam budget 2021-22? Let us begin with an examination of the budget’s heading called ‘revenue receipt’. All figures under this heading give a comprehensive idea of our income. Revenue earned from various sources includes taxes and non-tax incomes, the financial grants provided by the Finance Commission or monetary grants from the Union government for various schemes or projects. Assam budget 2021-22 projects an estimated Rs. 88,797 crore under this heading. For the previous year 2020-21 this figure stood at Rs. 91,931 crore. This means this financial year aims to earn 3.31 per cent lower revenue than the last year. This estimate will be much higher if we consider factors like depreciation and high price rise.

Let us examine figures under Assam’s own revenue. Incomes from taxes (like excise tax from the sale of wine etc.) or non-tax incomes (like bills that we pay for electricity consumption etc.) constitute this revenue. For the year 2021-22, the budget proposes Rs.27,276 crore from this revenue. In the previous year, this amount was Rs. 30, 513 crores. This means we have aimed to earn 10.6 less income than the last year.

Is it not a strange situation? When a state makes economic progress, it is expected that more revenue will be earned. Our government has repeatedly claimed that our economy is growing. If that is true, by simple economic logic, one would expect more addition to our revenue. But contrary to this, by the government’s own admission, this economic development – to be noticed in the form of increased revenue earnings – has mysteriously disappeared. Everyone understands the logic behind this reality of falling revenue income and slogans of economic development.
Our next aim is to examine the budget’s proposal for expenditure. How much the government intends to expend? Our standard of living conditions – like education, health, or agriculture, so on – depending on how much the government is willing to spend on various basic infrastructures. Added to our worry is the fact that we can so buy so little with our income. Prices of all commodities have increased extraordinarily. In the last 18 months of Covid-19, 2 the economically disastrous lockdown in 2020 has further worsened every one of us massively. We are surviving on sheer human will. Our economic condition, except probably for the salaried employees, is perhaps worst in recent history.

The most logical path would have been a budget which opens up the possibility of massive expenses so that more jobs are created or avenues for income generation is created. Economists worldwide had suggested that such expansionary budgets can only help a failing economy regain its good health. Contrary to this our budget stands in the opposite direction. Assam budget 2021-22 plans for an expenditure of Rs. 1,07,556 crore. For the previous year after revision (called revised expenditure) this figure stood at Rs. 1,22,342 crore. Again, to put it simply, we plan to spend 12 per cent less than the previous year.

This expenditure is divided into two. One portion is called revenue expenditure, and the other one is capital expenditure. Our salaries, pensions etc. are given from the revenue expenditure. When we spend in those areas which generate new income etc. (for example, a market infrastructure, or machine etc.), this is generally called capital expenditure. The capital expenditure is intended to create wealth. Our economic growth is directly linked to this expenditure. Unfortunately, our budget is proof of how over the years, this capital expenditure has been declining.

Also, retail prices and wholesale prices have increased phenomenally. Inflation of retail prices has reached a figure of 6 per cent. For the wholesale price, this figure has reached an astounding double-digit. This means to keep our economy in good condition we need to spend more than 6 per cent.

Economists agree that we need to give a big push to our economy for a quick recovery of such a failing economy. This big push can be in the form of investment and considerable expenditure. Contrary to this our expenditure is 12 per cent less.

As we have not generated enough revenue, where do we get resources to expend. Falling revenue and falling expenditure is a deadly combination to harm our economy badly. Economists can offer sound alternatives in such a situation. I doubt whether our government takes any advice from the best minds in economics.

The worrying picture of our economy is further disclosed in the Economic Survey of Assam 2020-21. Per capita income difference between Assam and India is Rs. 43,468 (at current prices, i.e. without inflation factors). This survey also shows that this difference has increased by 95 per cent between 2011-12 and 2019-20. In ten years of gap, an average person in Assam earns less by two times than an average Indian. Bold economic steps are needed to ensure a faster increase of our per capita income.

Our government -which neither had a State Level Covid-19 Policy nor a State Level Task Force – failed to manage the entire crisis miserably arising out of Covid 19.

This low per capita income is due to the poor performance of our agricultural economy. These sectors contribute 15 per cent to our Gross Domestic Product. This is a decline from 19 per cent from earlier years. During 2019-22 this sector’s annual growth rate (economists defines this as the average growth rate between two years) is as low as 2.35 per cent. Crops 3 grow at a rate of 1.8, and livestock grows at 0.69 per cent. Our per capita income is falling because of this low growth and the inability to get higher prices.

The service sector also performs poorly. India’s recent economic growth, everyone knows, is driven by this service sector (for example IT industry). During 2019-20 Assam’s service sector has grown by just 4.48 per cent. Trade and Real Estate – three major driving forces of our economy grow by little above two per cent. Transport performs badly. It stands at 0.65 per cent growth. Of our self-employed persons, 80 per cent are engaged in these sectors of the economy. This stagnated service sector is a window to bad days ahead.

Amidst this crisis has come the additional burden of public debt. During 2021-22, our government proposed raising the public debt to a huge figure of Rs. 99,594 crore. This is an increase of 24 per cent from 2020-21. In 2015-16 the public debt was approximately Rs.35,690 crore. Official figures suggest that Assam’s Public Debt Burden is more than 26 per cent of Assam’s GSDP in 2020-21.

Our government -which neither had a State Level Covid-19 Policy nor a State Level Task Force – failed to manage the entire crisis miserably arising out of Covid 19. Can we not take an unanimous resolution in this session of the assembly requesting the Union government to complete the supply vaccines to Assam immediately? Our hope of economic recovery rests on this. Assam budget 2021-22 refused to recognise this big trouble. Unfortunately, our intended goal is to create beneficiaries. This only tells about a government that suffers from a famine in economic imagination.


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Akhil Gogoi Written by:

Akhil Gogoi is the leader of Krishak Mukti Sangram Samiti (KMSS) a peasant organisation based in Assam

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