High time financial prudence prevailed over populism

Even as successive Chief Ministers have kept the tradition of presenting tax-free Budgets alive in the hill state, the harsh reality is that it is high time financial prudence prevailed over populism to arrest the galloping debt trap, touching Rs 50,000 crore.

Illustrations by Sandeep Joshi

Pratibha Chauhan

Even as successive Chief Ministers have kept the tradition of presenting tax-free Budgets alive in the hill state, the harsh reality is that it is high time financial prudence prevailed over populism to arrest the galloping debt trap, touching Rs 50,000 crore.

However, the larger question is whether first-time CM Jai Ram Thakur can take the bold step of imposing taxes on those, who are economically in a position to do so. With this being an election year, there is little hope from Thakur, who will be under tremendous pressure to ensure that his party retains all four Lok Sabha seats it had won in 2014 parliamentary polls. What is even more worrisome is the fact that with very few revenue generating sectors in the hill state, the picture with regard to Himachal’s share in Central taxes still remains unclear, post the GST. The state remains almost totally dependent on the Central grants and Centrally sponsored schemes for undertaking its development works.

The major percentage of the Budget is coughed up by salaries and pension liability of the serving and retired employees and loan interest repayment component. Even though officials take pride in the fact that there has been no overdraft and only Rs 3,000 crore out of the permissible loan limit of Rs 7,600 crore has been availed, this brings little solace to the cash-strapped economy. The annual plan for the 2019-20 fiscal has been fixed at Rs 7,100 crore, while the CM is expected to present an early Budget for the next fiscal by the end of February, in view of the parliamentary poll. He is expected to present a populist Budget, which will be aimed at wooing the electorate, who are beginning to echo their concern over the failure of Modi regime to rein in price rise. The debt trap which was Rs 35,151 crore in March 2015 had touched Rs 48,000 crore in March 2018. As per latest estimates, this figure is inching close to Rs 50,000 crore, which is a cause of major worry.

Creating jobs biggest challenge

With an unemployment figure of almost 10 lakh in a population of 74 lakh, generating employment opportunities remains the biggest challenge for the BJP regime. As such, the Budget is likely to focus on attracting investment in the private sector to create jobs.

Negative growth in agriculture another worry

The negative growth reflected by the agriculture sector has been another cause of worry for the successive governments. The focus of last year’s Budget was on the farm sector with a majority of the population residing in rural areas. The schemes announced by him last year included Rs 250 crore irrigation scheme called Jal Se Krishi Ko Bal, Rs 200 crore solar pump installed irrigation scheme called Saur Sinchai Yojana for five years, Rs 150 crore Flow Irrigation scheme for five years, Rs 15 crore for efficient irrigation through micro irrigation schemes and Rs 10 crore for the construction of bore wells. The other schemes with emphasis on zero budget farming included the Rs 25 crore Prakritik Kheti Khushal Kisan scheme. Presenting his first budget last year for 2018-19, Thakur had remarked that he was keen to present a budget which was different from the past having new initiatives and vision, which is the reason that 28 new schemes had been announced. “It was a challenge to offer something to every section within the limited constraints, but I have made an effort to touch the lives of every section, be it youth, women, elderly, employees and farmers,” the CM had said, while presenting the Budget.

The government has adopted the BJP drishtipatra (vision document) as a policy document. So, that could help frame development policies and welfare schemes.

BUDGET 2019-20 EXPECTATIONS

The annual plan for the financial year 2019-20 has been fixed at Rs 7,100 crore. The Chief Minister is expected to present an early Budget in the Vidhan Sabha for the next fiscal by the end of February in view of the parliamentary poll.

He is expected to present a populist Budget, which will be aimed at wooing the electorate, who are beginning to echo their concern over the failure of Modi regime to rein in price rise and generate employment.

In the last few days, the CM held a series of meetings with partly leaders and senior bureaucrats so that the shape of the budget can be finalised. Public opinion, too, has been sought from individuals, NGOs, social organisations and industry, tourism and power stakeholders. The CM said any suggestions which are found to be good would be part of the budget.

The Budget is likely to focus on employment generation, tourism promotion, giving a fillip to agriculture and attracting big investment in various sectors.

INVESTORS’ MEET

The Himachal Government is eyeing an investment of whopping Rs 80,000 crore by wooing investors, including those from overseas, in the industry, healthcare and wellness, tourism, power, fruit processing and health sectors by holding an Investors’ Meet in June at Dharamsala.

The Ambassadors or High Commissioners of Japan, Netherland, Singapore and UAE will be contacted for exploring investment opportunities from these countries. In India, investors’ meet will be held in Delhi, Mumbai, Bengaluru, Ahmadabad, Ludhiana and Hyderabad.

As per the proposal prepared by the Industries Department, a target of attracting Rs 20,000 crore each in the power and infrastructure and logistics sector, Rs 15,000 crore in the manufacturing sector, Rs 10,000 crore in the tourism and hospitality sector and Rs 5,000 crore each in healthcare and fitness, agri-business sector and information technology, electronics and skill development has been planned. The previous Virbhadra regime had also held an investors’ meet at various places, where the claims of big investment with very good response at participation at these meets were made but finally there was very little investment than what had been projected and anticipated.

In fact, the Congress regime had even initiated the process for the setting up of a State Investment Promotion Board to ensure proper monitoring and flow of funds in various sectors such as power, industry, tourism and IT. The motto was: “Industry by Invitation” and “Invest Himachal”, while promising assured cheap and reliable power and all clearances within 90 days’ time.

Spending and earnings in 2018-19

The salary component of almost 2 lakh government employees coughed up Rs 11,000 crore, while the pension burden was to the tune of Rs 6,000 crore annually. A sum of Rs 4,300 crore had to be paid as interest on loans, during the financial year 2018-19, ending in March 2019.

The biggest area of concern was the extra spending on recruitment besides the upgrade and opening of new health and educational institutions.

The fact that hardly any big hydro-projects are being operationalised, neither are there takers for the new identified projects, is a major cause of concern for the government. The very low rates of power per unit had resulted in sharp decline in revenue from the power sector in the last few years. However, the only silver lining is the hike in revenue from the power sector from Rs 750 crore in 2017-18 to Rs 10,500 crore, till the end of the year. The biggest challenge before the CM, who holds the Finance Department is generating resources, for which the government is eying power, tourism, industry and mining.

Confederation of Indian Industry’s wishlist

Industrial Development Scheme: The scheme announced by the Centre has discriminated with states like Himachal Pradesh, Uttarakhand and Jammu and Kashmir, as they have been deprived of the benefits like Central Interest Incentive, GST Reimbursement, Income Tax Reimbursement, Transport Incentive and Employment Incentive. There is a need to impress upon the Centre to consider extending these incentives to Himachal as well.
GST Refund: By making appropriate budgetary provision and doing away with the CGCR and AGT, which still exists despite GST. State can ask the Centre to compensate it for revenue loss.
Electricity Tariff: In 2017, Punjab and Haryana have given a major sop to industries by reducing the electricity tariff at Rs 5 per unit and Rs 4.99 with no further escalation for five years. Low-priced electricity tariff has always been one of the USPs of HP and the state should bring down the cost for end users and make it even more competitive.
Revenue Laws: The revenue laws should be amended in line with bankruptcy code to facilitate transfer of properties in case of sickness of enterprise.
Incentivising Industry in Rural Areas: There is need to attract industry to rural areas as it will help in creating job opportunities for the youth and stop migration. Separate industrial policy should be offered to any business house investing in the rural areas.
Tourism Promotion: Need for a revamped version of the tourism policy with special focus on health and wellness, eco, adventure, rural and orchard and religious tourism.
Strengthening road, air and rail connectivity: The road, air and rail connectivity can be strengthened by establishing a rail link from Chandigarh to Baddi, Kala Amb and Paonta Sahib. Also, four-laning of Pinjore-Baddi-Nalagarh, Chandigarh-Siswan-Baddi and Kala Amb-Dehradun roads.

CM: Thrust will be on strengthening existing schemes

Our thrust this time will be on strengthening the existing schemes and programmes rather than going in for more schemes. I am keen that there is much more happening in the tourism sector, as it has immense potential. One of the focus areas of the investors’ meet proposed to be held in Dharamasala in June will be attracting investment in health resorts, spas, eco-tourism and adventure tourism. We have extended incentives to attract independent power producers, who have shown lukewarm response towards taking up new projects to harness the 27,000 MW hydel-power potential in the state. Power, tourism and industry are the three main areas, which can bring in the much needed revenue and for this, we need to remove all hurdles and provide an investor-friendly atmosphere in the state.

Jai Ram Thakur, CM

Giving major fillip to tourism need of the hour

The senior party leaders have held discussion with the CM on the shape and focus of the Budget. I strongly feel that rather than announcing new schemes, it will be better if the ones announced in the last budget are made functional and strengthened. With limited revenue generation sources, the need of the hour is to give a major fillip to tourism. The thrust should be on developing religious, health adventure and eco tourism, for which there is vast potential. The climatic conditions and salubrious setting of Himachal are ideal for setting up of fitness and wellness centres, something which Uttarakhand has done so beautifully. Giving land to Swamy Ramdev might have drawn criticism, but in the longer run, only such places will help generate employment avenues, which is our biggest concern. I feel even if we have to give concessions and incentives to invite big investment in the tourism, industry, agriculture and horticulture sector, we must do it in the larger interest of the state. We need to attract high end tourists as even now there is no dearth of tourists but they are mostly those with a shoe string budget, in which the state gets very little revenue. Also, there must be thrust on promoting self-employment ventures, as this will help the educated jobless youth get employment. I also feel that it is time we need to ponder whether we should run tourism hotels, a majority of which are running in losses, or hand them over to the private sector. The rest houses, be it of the Forest, PWD, Electricity or other departments can also be put to commercial use by linking them to eco and religious tourism.

Satpal Singh Satti, State BJP president

Rising unemployment biggest concern

The biggest concern that the state government needs to address is undoubtedly rising unemployment. This can be addressed only by promoting tourism and industry as there is very limited scope for jobs in the government sector. However, tourism promotion can be done only by developing infrastructure and providing an investor-friendly atmosphere. There has been a talk of improving air connectivity but little has been done on the ground to have heliports ready, which can help state get benefit under Udaan –II. The government should identify areas that can be developed as tourism zones keeping in view its tourism potential. We must also try to attract more investment, so that we are able to get more in the form of taxes. Our share in Central taxes has gone down and we are almost totally dependent on Central funding. With the BJP being in power both in Himachal and Centre, Prime Minister, who always professes proximity and emotional bonding with the hill state, must extend special financial assistance. He should also help Himachal get its due of Rs 4,200 crore, as its share in the Bhakra Beas Management Board (BBMB) projects, which the neighbouring states are yet to pay. The Centre should also accede to Himachal’s demand for imposing water cess, as in the absence of major industry and other revenue resources, the water cess will bring in revenue.

Sukhwinder Singh Sukhu, State Congress President