M A I N   N E W S

States fail to use surplus funds
Anita Katyal
Tribune News Service

New Delhi, November 12
There is both a good and a bad news from the states. The good one is that the days of resource crunch are now a history. Perennially in the red until a few years ago, all states, except Kerala, have fairly large cash holdings today. The bad news is that in a number of cases, cash is lying idle with the Reserve Bank of India (RBI) as the states have been unable to spend the money at the same pace at which they are earning it.

With a boom in the real estate, overall improved growth rates and better tax collections after the introduction of VAT, the economic condition of the states has registered a substantial improvement. “Besides, there has also been an increase in the transfer of funds from the Centre to the states,” maintained Mr P.K. Bansal, Minister of State for Finance.

However, the numbers also tell another story. For instance, official figures for the first week of November, made available by the RBI, show that Uttar Pradesh with Rs 9,425 crore has the highest treasury holding. This is inclusive of the Central funds made available to the states for various development schemes.

UPA sources said though this indicates that the jump in the stamp duty collections has improved the “bimaru” state’s economic health, it also shows that the Mulayam Singh Yadav government lacks the capacity to absorb the money allocated to it for infrastructure development and social sector programmes.

Haryana is third on the list, having cash holding of Rs 4,364 crore after Tamil Nadu, which has Rs 4,762 crore in its kitty.

Mr Birender Singh, Haryana Finance Minister, said the state’s earnings had witnessed a quantum jump because of VAT collections and the booming property market because of which stamp duty earnings had registered a 300 per cent increase in the past two years.

He did not agree with the contention that the large cash holding indicted poor utilisation by the state governments. “The allocations for various programmes are generally low in the first quarter. In Haryana, for instance, we release 25 per cent of the total money to different departments. But as the year progresses, larger amounts are made available,” he explained.

In contrast to Haryana, Punjab had only Rs 713 crore in its account early this month, which increased to Rs 947 crore in the second week. Like its neighbour, Punjab has also benefited from VAT collections and the boom in the real estate. “Our stamp duty collections went up from Rs 850 crore to Rs 1,700 crore in the last year. This is a hundred per cent increase,” said Mr Surinder Singla, Punjab Finance Minister. As for the available cash, he said, the state government was constantly using it for its numerous programmes.

While the state governments are exulting over their cash-rich status, this euphoria may well be short-lived. Constantly pointing to the robust economic health of the states, Union Finance Minister P. Chidambaram had suggested at the last full Planning Commission meeting that the state governments should increase their share in the Centre-sponsored schemes like Bharat Nirman. But the state governments, which were always rushing to the Centre asking for “more”, are unlikely to agree with this view.



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