Wednesday, March 19, 2008

Maharashtra Budget 2008-2009

Maharashtra Finance Minister Jayant Patil on Wednesday created a record by presenting his 10th consecutive budget in the legislative assembly.

Patil, senior NCP minister who came to the assembly sporting a dhoti, kurta and a cap like a farmer, started his budget presentation with a Marathi couplet eulogising the contribution of the farmers and wishing them prosperity.

Patil has been presenting the state budget since the Congress-NCP government came to power in 1999.

Union power minister Sushilkumar Shinde had a record of producing nine consecutive budgets while he was state finance minister.

As soon as he started reading his budget, the opposition members raised slogans demanding complete loan waiver for the farmers and blank "saath bara"( land revenue document).

The slogan shouting continued for about five minutes.

The higlights from the budget speech are :

Maharashtra’s economy is seen growing at 9% during 2007-08, according to the economic survey tabled in the state legislature on Tuesday. The projected 9% growth in the gross state domestic product (GSDP) is better than the estimated national growth rate, but is lower compared to the state’s past performance.

The economic survey terms the 9% growth as “promising”, with the primary sector growing a poor 5.7%, secondary (industrial) sector maintaining the momentum at 10.4% and the tertiary (service) sector growing at 9.1%.

The survey lauds the sustained GSDP growth over the past four years, but calls for a broad-based approach henceforth for development of agriculture and allied sectors, upgradation of rural infrastructure, and strong integration of rural areas with the urban.

On the positive side, the survey highlights reduction in fiscal deficit from 5.3% of the GSDP in 2003-04 to 3.1% in 2006-07. The survey attributes this to the Fiscal Responsibilities and Budget Management Act (FRBM), 2005, which promises to wipe out revenue deficit by 2008-09, and the concerted effort to implement VAT.

The survey also takes note of the impressive growth in revenue receipts, at 20.6% between 2003-04 and 2006-07. Proportionately, the revenue expenditure has increased by 14.1% per annum. Tax and non-tax revenues grew at 20.3% and 40.3%, respectively in 2006-07.

The survey, however, identifies increasing debt-burden and rising interest payment as “major areas of concern” undercutting the growth story. In 2007-08, the state’s overall debt is expected to be Rs 1,44,325 crore, which accounts for 24.9% of the GSDP. The state’s spending towards interest payment is estimated to be Rs 12,406 crore, which constitutes 18.2% of the revenue receipts.

Preliminary estimates indicate that the net state domestic product, or state income at current prices, was Rs 4,37,035 crore in 2006-07, 16.3% higher than the 2005-06 income. At constant (1999-2000) prices, this income works out to Rs 3,25,148 crore. The per capita state income at current prices in 2006-07 was Rs 41,331 as against Rs 36,090 in 2005-06.

On the income side, the state is well ahead of other states and the national average. In 2006-07, the per capita national income at current prices was Rs 29,642. In 2006-07, the GDP was 15.9% higher than that in 2005-06, but the Maharashtra GSDP grew 16.3% during the same period.

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