HP Budget offers sops and no new taxes

Local Area Development Authority for new and upcoming industrial areas to be introduced

While presenting a tax-free Budget here today, Himachal Pradesh Chief Minister Vir Bhadra Singh made an attempt to address the dismal infrastructure in the state, besides offering sops to daily wagers and contractual staff by regularising their services.

As per the Budget, revenue receipts are estimated at Rs 6,521 crore, against which revenue expenditure is projected at Rs 6,775 crore. On the capital account, total receipts will be to the tune of Rs 2,152 crore, and expenditure""including repayments and advances""are projected at Rs 1,911 crore.

The total projected expenditure is Rs 8,687 crore, out of which Rs 2,714 crore will be spent on salaries, Rs 1,754 on interest payments, Rs 1,000 crore on loan repayments and Rs 698 crore on pensions.

Against an expenditure of every Rs 100, the state will have Rs 75 as receipts, including transfers from the Centre.

The state's average daily expenditure is Rs 23.80 crore, and average daily receipts excluding loans are Rs 18 crore.

The chief minister, who also holds the finance portfolio, acknowledged, "In the peripheral areas of the state, rapid growth of industry has started materialising without adequate attention to the provision of critical infrastructure."

In order to conform to certain area development plans, the state government is now setting up a "Local Area Development Authority" for new and upcoming industrial areas on the pattern of Noida, under which a single-line administration system will be introduced by cross-cutting the authority of the administrator over all line departments."

"A Bill to give effect to this policy will be introduced in the present session of the state Assembly," he said.

Since the announcement of the New Industrial Policy, the state has made significant progress in the field of industrialisation.

The government has approved 6,669 projects with an investment Rs 16,438 crore.

Due to delays in the purchase of land under Section 118 of the State Tenancy Law, prohibiting outsiders from buying land in the state, which was causing delays to many investors, the state government now plans to simplify rules for investors from all over the country to purchase land in industrial zones across the state and particularly invest in the tourism, health and education sectors.

To benefit from e-governance, the state government proposes to switch to the e-payment system in a phased manner, beginning with transactions with major suppliers and contractors and release of payment in their accounts,in order to increase transparency and reduce delay in payments.

Bearing in mind the large number of people from the hill state serving in the armed forces, the Budget proposes to increase annuity payment heavily, to gallantry award winners.

On the tax collection front Singh stated, "Towards a more realistic assessment of revenue accruals from the value-added tax, I propose that VAT refunds be settled every quarter in place of the present limit of two years."

Around 15,000 daily wagers who completed eight years of service in 2004 will be adjusted in various departments.

Besides, over 38,000 work- charged employees in the public works department (PWD) and irrigation and public health department(IPH) will be regularised, among other categories of workers including raising the allowances of the panchayat(village councils) level workers.

These sops are further expected to burden the state's debt crisis which, at Rs 16,500 crore is rising rapidly and is one of the worst in the country.

The state's economy is expected to grow by 8.2 per cent in the coming year (2006-7), outpacing the national growth rate of 8.1 per cent.

According to an economic survey, inflation rate is 3.5 per cent. The per capita income at current prices is Rs 30,138 as compared the the national average of Rs 25,788 in 2005-6.