Bihar presents Rs 1.6 lakh cr budget; focus on education, rural development

Prohibition and demonetisation forced the govt to cut its projected spending on crucial departments

Keeping its focus on education, rural development, power and road construction, the Nitish Kumar led Grand Alliance government in Bihar presented an estimated budget (2017-18) of Rs. 1.60 lakh crore budget - projected 10 per cent higher the current fiscal year.

The budget was presented by Finance Minister Abdul Bari Siddiqui on Monday in state legislature during the post lunch session. The state government has not introduced any fresh taxes because of the expected Goods and Services Tax (GST). "The central government has assured us that the GST will be rolled out very soon. Therefore, we have decided not to infringe on the tax rates," told Siddiqui in a post budget press conference.

The budget has an estimated annual scheme outlay of Rs. 80,891 crore, whereas it has allocated Rs. 78,816 crore under the Establishment and Committed Expenditure. Education, with an allocation of Rs. 25,241 crore, continued to be government's top priority. On the other hand, rural development relegated energy department to fourth in terms of funds allocation under the annual scheme outlay. Rural works department, responsible for the construction and upkeep of rural roads, maintained the third slot. Meanwhile social welfare relegated road construction to sixth position. It clearly indicates Chief Minister Nitish Kumar's bid to ramp up education, scholarships, infrastructure and so on to woo new vote banks ahead of the general election in 2019.

However, tighter purse strings, mainly because of the prohibition and demonetisation, have forced the state government to cut its projected spending on crucial departments such energy, health, rural development and so on. Moreover, the projected high expense on the implementation of the recommendations of seventh pay commission has also increased state government's revenue expenditure, further impacting the allotment for social sector.

The allocation for energy sector fell by 24 per cent as compared to the allocation for the current fiscal. Meanwhile, the allocation for health sector fell by 15 per cent in the new financial year.

The state government expects a rise of almost 8 per cent in its own tax revenue despite many analysts have predicted a fall in its tax collection in the current fiscal. "We expect to collect Rs. 32,001 crore in our own tax collection in the next fiscal, which is Rs. 2,271 crore more than the current estimates," told Ravi Mittal, Principle Secretary of Finance Department.

Siddiqui accepted that there will be a fall in state government's revenue because of the prohibition, but strongly suggested that the loss will be made-up by the rise VAT collections as the sale of other commodities have went up.