Hon CM Dr Sawant presented his first full-fledged Budget with a projected expenditure of Rs 21,056 crore against Rs 19,548.69 for previous year, for an expected size of the economy at Rs. 92,260 crores. The economic growth rate for 2020-21 is projected is 8.6 percent. This is down from the last target of 10 percent pronounced in the budget of 2019-20.
Shrinking economy
The government should have taken responsibility for the miserable shrinkage of our economic growth rate rather than making an unrealistic projection again. The new figures don’t look realistic given the consecutive arrest in growth in past two consecutive years. The Hon CM could have taken a clue form in his own Economic Surveys (ES) of the past which have admitted the solid slump. The ES 2018-19 admits that the growth rate of our State’s economy in 2017-18 has decreased by half to around 6.23 percent (based on Quick estimate) from 12.49 percent for year 2016-17 (based on Provisional estimate). Similarly, the ES 2019-20 states that from 11.08 percent growth in 2017-18 it has come down to 9.82 percents in the year 2018-19.
The latest figures available on the composition of our GDP based on current prices sadly denote that the contribution of the Primary sector to GDP has decreased from 8.84 percent in 2017-18 to 7.86 percent in 2018-19, of the secondary sector is constant at 54 from 56 in 2017-18 to 60 percent in 2018-19 while that of the tertiary
sector remained flat at 37 to 38 percents, respectively.
Budget lacked any concrete steps to revitalise tourism and agriculture and fishing while for mining hollow promises followed seemingly giving up all the efforts to revive the industry. On the contrary the proposed budgetary increase in excise, and
licences fees for the ensuing year will affect tourism, the only industry on which our State is currently dependent on. The ES data talks about the fishing industry losing its sheen in the current year. The mining is any way down while the agricultural grown is falling. The credit off take has not improved either. Given that the
benchmark for the banks is to lend at least 40 percent of the deposits generated in any State economy, the current lending of 30 percents is just a unit percent more than last year indicating no significant credit off take growth in the State.
The rural and non-agricultural trade sector will be affected through the ill-thought Professional tax levy. With a proposed increase in goods of domestic consumption, Budget has made all attempts to make Goa as non preferred, expensive tourism destination even for the domestic tourists. The budget has critically targeted the
tourism sector through increase in excise, permit, license fees, penalties and registration fees and this will hugely impact the coastal tourism in the State through an inflation trajectory. Budget will further affect the ailing real estate and construction business and the affordable housing segment is feared to turn unaffordable by unwarranted revision in the minimum price of fair value rates of land.
Why is the Budget unrealistic?
In the current year 2019-20 the States own-tax revenue and the non-tax revenue have been revised downwards compared to what was budgeted, indicating our revenue has actually declined. The State seems to have postponed the budgeted capital spending almost by Rs. 598 crores to make the fiscal deficit figures look
seemingly good. Inspite of all this internal adjustments our fiscal deficit (net borrowings to fund consumption and expenditure) and the primary deficit (fiscal deficit plus interest payments) actually breached the targets compared to what was budgeted in 2019-20.
If one compares the downward revisions made to the budgeted figures of 2019-20, Budget 2020-21 projects overoptimistic revenue. The Hon. CM expects tax-revenue of Rs. 5,845 crores in the ensuing year 2020-21 compared to Rs 5,182 crores (RE) current year 2019-20 along with a projected non-tax revenue of Rs. 2,085 crore year compared to Rs. 1,750 crore for the current year.
The document ‘Figures at a Glance’ state that Rs. 13,300 crore is expected from the revenue receipts in 2020-21 compared to RE of 2019-20, and Rs 2,676 crores from capital receipts. Thus the State expects to increase its own tax revenue by 16 percent and its non-tax revenue by 11 percent in 2020-21 compared to the current year.
Expecting that the share in central taxes may come down in the ensuing year, State expects the grants in aid coming from central government will increase by 20 percent in the year 2020-21 compared to Revised Estimates (RE) of 2019-20.
The fiscal deficit for the year 2019-20 is expected to be Rs. 1,469 crore compared to Rs 1,418 crore budgeted for the current year. For the State of Goa what is also disturbing is the increase in the overall deficit.
The overall deficit for the ensuing year is expected to be Rs 5,358 crores compared to RE figure of Rs 2,566 crores. This means to say that the increase of over 100 percent in the ensuing year is expected
compared by Rs 2,175 crores in the ensuing year compared to the current year owing to increase in debt burden repayment.
Taxing the common man
In the non-tax revenue the budget seeks to increase the size of its coffers by Rs 450 crore though the Mining department and another Rs 220 crores from increase in receipts from Power. Hence, significant increase in own tax revenue will come from 15 percent higher burden on Goans through increase in power tariff, stamp duty, state excise and through taxes on sales and trade respectively.
The Budget certainly will not ease the living, but on the contrary increase the uneasiness of living since budget by making cost of living even more costly in this little paradise of ours. No people will find living easy unless the administrative machinery is well geared, living is affordable and tax terrorism stopped. Rather than
cutting wasteful expenditures on junkets, the budget attempts a revenue increase by taxing the common man and making affordable services unaffordable.
Since 2013, cost of stamp papers increased from Rs. 10 to Rs. 100 which has seen 10 times increase in 6 years will adversely affect common men. In addition to the above, the burden of increased SGST by 11 percent, Power tariff (by 10 percent), and GST (8
percent) on Goans, will simply increase the cost of living in an already ‘expensive’ consumer State like Goa.
From the allocations for various departments it is clearly show that political aspirations of few ministers have been well taken care of. The budgetary provisions for many departments and sectors have been eyewash. Health department got only 7 percent more, while for Sports a mere 2 increase. A drastic cut was noticed for the
Department of Information and Publicity of around 22 percent while the Municipal Administration has received 4 percent less compared to the allocation in the current year.
Among various departments that benefitted the most, the Department of Cooperation received 37 percent more funds for the ensuing year compared to the RE of current year while the Arts and Culture received 31 percent higher compared to the current year. The Department of Industries received 32 percent increase, Fishing (28 percent more), and the Social Welfare received a monumental allocation increase of 21 percent.
The passing year has seen a nationwide dampness in the economy as a whole, dwindling foreign tourists, and halt to the thriving mining business in the State.
Given this the new budget 2020-21 was expected to be better. The new Budget remarkably failed in showing the economic road map for recovery. The very limited choices at the disposal of Hon CM and for the wrong choices made, Budget 2021-21 is not better either.