Claiming that he had “inherited a shattered economy and near-empty coffers”, Haryana Chief Minister Manohar Lal Khattar on Monday came out with a White Paper presenting the factual status of various aspects of finances and related growth data over the 10-year period between 2004-05 and 2013-14.
Mr. Khattar said the document seeks to diagnose the areas where course correction by way of policy intervention is required to put the economy on a fast growth trajectory. He also invited suggestions from economists, financial experts, academics and political parties on shoring up revenue, accelerating economic growth, creating more jobs and to improving the lot of the people, particularly the poor and farmers.
The Chief Minister clarified that the aim of the White Paper was not to criticise the previous Congress Government led by Bhupinder Singh Hooda but to let the people know the correct picture about the economic realities and state of finances of the government.
“I had promised to bring out a White Paper to benchmark the status of the State finances before the Budget session of the State Assembly, and I have kept my word,” Mr. Khattar said.
He said urgent steps were needed to speed up the growth of the primary sector. This can be done by promoting diversification of agriculture and by improving productivity of the workforce engaged in farms -- given that large number of families are dependent on agriculture, animal husbandry, horticulture and other allied activities.
As for the secondary (industrial) sector, Mr. Khattar said the White Paper had revealed that it too was on a decline. “We need to take immediate measures to arrest this decline and improve the contribution of manufacturing to the State’s Gross Domestic Product (GSDP) which has fallen in the past decade. Haryana must leverage its locational advantage to give fresh impetus to the lagging industrial sector.”
He said the poor health of State finances has shown the need to shift from populism to a merits long-term vision based on the principles of sound economics.
The White Paper has also brought out the trends in macro-economic indicators, budgetary receipts and expenditure and analysed the 10-year trends in growth of tax revenue, non-tax revenue, revenue collection as well as areas of shortfall and slow growth in receipts.
Finance Minister Captain Abhimanyu while providing the details said a declining trend was noticed in both the State’s own tax revenue and non-tax revenue between 2004-05 and 2013-14. “This is indicative of systemic weaknesses that plagued the system under the previous government, lack of governance, and suboptimal resource mobilisation in the State.”
He said the State’s own revenue as a share of total revenue declined from 89.5 per cent in 2004-05 to 80.4 per cent in 2013-14, indicating its inability to raise resources. On the other side, he said, the share of Central grants in total receipts which was 4.9 per cent in 2004-05 soared to 10.9 per cent in 2013-14.
Captain Abhimanyu also insisted that the previous government had used about 90 per cent of the receipts on revenue expenditure and only 10 per cent on capital expenditure, indicating that uncontrolled growth in revenue expenditure came in the way of a sustained growth of capital expenditure.
The Minister said negative growth in agriculture (primary) and decline in the industrial (secondary) sector was also observed during the period. He said the dip in the contribution of the industrial sector to the Gross State Domestic Product had also dragged down revenue, employment generation and growth of the State’s economy.
Captain Abhimanyu also blamed reckless, unplanned and unproductive spending by the previous government for reducing a revenue-surplus
Haryana to a revenue-deficit State in the 10 years. Moreover, he said the fiscal deficit rose from 1.26 per cent of GSDP in 2004-05 to 4.51 per cent in 2009-10, showing that government spending was increasingly financed by raising loans.
He charged that the State had even resorted to borrowing to repay old debts during the Congress rule.
