|
|
|
Economic
Development Policy |
| STATE
FINANCES |
Back..... |
|
EXPENDITURE RESTRUCTURING AND MANAGEMENT
In
order to arrest further decline of the fiscal situation, along with
improved revenue mobilisation, the state will lay a major emphasis on
programmes for management of expenditure. Reforms have already been
commenced through the Public Resource Management Programme. The main
cornerstones of expenditure management are:
|
| » |
Reduction
of administrative expenditure
|
| » |
Consolidation
of subsidies
|
| » |
Public
Enterprises Reforms
|
| » |
Charting
of a Core Investment Programme
|
|
The
state has identified 67,000 posts for reduction. In addition, filling up
of posts that fall vacant through retirements would be kept in abeyance
or may be abolished altogether, except for those of strategic
importance. Additional posts in any department may only be created after
incisive scrutiny and all possibilities of readjustment and deployment
from surplus cadres are exhausted.
To
leverage the scarce resources to enhance growth and social development,
there is a need to increase the developmental impact of public
expenditures. Unproductive expenditures like salaries and subsidised
welfare programmes must be reduced with corresponding increase in
investment in development of social and physical infrastructure. Strict
control would continue to be enforced over expenditure on travel,
entertainment, stationery, machinery and equipment, staff cars,
telephone expenses etc. in all government departments, PSEs, and
autonomous bodies.
Pensions
The
present computation of pension which is on the basis of the last drawn
‘Basic Salary’ by the employee plus an escalation due to increase in
the Dearness Allowance (DA) from time to time, makes it an open-ended
liability for the Govt. The pension is payable to the employee till
death and subsequently, 50% of the said amount is payable to his spouse.
As such there is no contribution from the employee and the entire
pension is borne by the Government. The GoMP currently employs
approximately 5 lakh personnel and for the year ended 2000-2001 the
total amount of expenditure incurred on payment of pension was
approximately Rs.1451.63 crores. This amount is only going to keep on
increasing as the years go by due to a combination of more number of
employees retiring and increase in DA rates. This would lead to a
further pressure on the Government’s finances. Pensions account for
nearly 10 per cent of revenue expenditure; and is likely to increase
exponentially and is not sustainable. The pension policy for new
recruits would be reviewed based on “defined contribution” instead
of “defined benefit”.
Loans and Advances
As
part of the employment benefits, the Government of Madhya Pradesh
provides various loans and advances to its employees e.g. car/ scooter /
cycle advance, grain advance, festival advance and computer advance,
which add up to about Rs.
17.83 crores. This involves considerable paper work and there are also
slippages in recovery. Since consumer finance loans are now easily
available in the market, these advances can be discontinued.
Subsidies
Subsidies
represent the social objectives and priorities of the state, but in view
of the changing fiscal situation, periodic review of these policies
becomes imperative. Subsidies
given to various public services, particularly economic services, have
made a major dent in the scarce financial resources of the state. The
Finance Department, in discussion with other concerned departments,
would undertake periodic
review of the current subsidies with a view to purging those that have
lost their relevance or have outlived their utility. All future
programmes need to be sharply targeted, with a strict assessment of
beneficiaries. The sectors must be restricted only to public and merit
goods so as to reduce the overall quantum of subsidies.
Some
subsidies are clearly “non-merit” and are benefiting the relatively
well off sections. For example:
|
|
» |
Subsidised transport for Government employees in Bhopal
(Rs. 1.20
cores).
|
| » |
Subsidy for tube wells benefits mostly the bigger farmers. It can
be confined to SC/ST/small farmers (Rs. 5 crores). The scheme should
also be rationalised as both Agriculture and Irrigation Departments are
providing subsidised services.
|
| » |
Scholarships/grants to MP Flying Club
(Rs. 50 lakhs)
|
| » |
Since facility for free power to farmer and single point
connections has been substantially curtailed, subsidy to MPEB on this
account can be discontinued (Rs. 120 crores)
|
|
Efforts
would also be made to improve loan recoveries, particularly in the
housing and the agricultural sectors.
Reforming State Level Public Enterprises
The
deteriorating performance and condition of some of the public
enterprises have forced the Government to consider withdrawing from
undertakings where it has failed to run operations profitably and
finance them on a sustained basis. Unviable units, which are a constant
drain on the state exchequer require to be shut down at the earliest
while some which are capable of being managed more efficiently by the
private sector need to be divested and the proceeds used to retire the
high cost debt of the government.
The
state government has already identified several entities like the MP
Export Corporation, MP Land Development Corporation, MP Leather
Development Corporation, MP State Textiles Corporation, MP Fisheries
Development Corporation and four units of the MP State Industries
Corporation, for a closer examination. This process of closing down
selected PSUs has been implemented in the case of some PSUs. It has to
be implemented in the case of remaining PSUs viz MP Export Corporation,
Police Housing Corporation and Land Development Corporation. PSUs for
which VRS has already been approved must actually be closed and wound up
within a strict time frame.
Re-organisation of Madhya Pradesh State Road
Transport Corporation
The
Transport Department has prepared a plan for the reorganisation of the
Corporation into one main Company and three subsidiary companies. The
implementation is going on according to the proposals forwarded
by Adam Smith Institute. Application forms for the registration of the
Companies have been published. The
names of following Companies have been proposed as under.
|
| » |
Madhya Pradesh Road Transport Company Ltd. |
| » |
Bhopal Regional Road Transport Company Ltd. |
| » |
Indore Regional Road Transport Company Ltd. |
| » |
Mahakaushal Regional Road Transport Company Ltd. |
|
The
new companies will come into existence after the completion of
registration procedures.
It
has been decided to form a Road Transport Corporation for the rest of
the State under the provisions of the Road Transport Act, 1950 and
Section 58(4) of the State Reorganisation Act, 2000. Following this, the
Madhya Pradesh Road Transport Corporation was established for northern
M.P.
The
Department has already decided to offer voluntary retirement to 5000
employees in the first year and to transfer another 3600 employees to
Chattisgarh. The procedure
of voluntary retirement is being formulated. In addition, the Department
may also consider privatisation of some of the routes, besides selling
or leasing of property.
Improved revenue mobilisation by urban local
bodies
Through
the 73rd and 74th Constitutional amendments, rural
and urban local bodies have been granted constitutional status and
devolved various administrative and developmental powers. The local
bodies have been given substantial authority to mobilise their own
resources through taxes and user charges to finance higher proportion of
their growing expenditure needs. In view of the state’s present fiscal
scenario, it has become even more imperative for local bodies to exploit
the powers to the hilt to garner financial resources on their own.
Property Tax reforms have already been initiated, while
identification of appropriate sources for indirect taxes are under
consideration. Simultaneously, the ULBs need to significantly enhance
efficiency and accountability in their expenditure.
Core Investment Programme
The
state of infrastructure, both physical and social, is acting as a drag
on growth in Madhya Pradesh. The sector calls for urgent intervention if
the growth process is to be accelerated and states finances are to
benefit. Alongwith the requirement of funds for proper maintenance of
existing assets, infusion of resources for new projects is extremely
critical.
Fresh
investments on the plan side of the budget would be targeted
specifically towards priority or new thrust areas. A Draft Core
Investment Programme (CIP), has been prepared for sustainable and
optimal utilisation of resources, with judicious trade-offs. The CIP
will be protected in the budget and further steps will be taken by
Planning Department to institutionalise the CIP process for the future.
District Plans
To
carry the process of decentralisation to its logical conclusion the
Government of Madhya Pradesh has decided to formulate District Plans
from the year 2002-2003. District Plans are being prepared by the
District Planning Committees on the basis of an assessment of needs
& resources which include both State assistance for District Plans
and locally available resources. The district plans are integrated into
Sectoral State level Plans. Decentralised planning is expected to yield
better results in terms of plan implementation and economic development
of the State.
Privatisation of Infrastructure
While
maintaining the momentum of public expenditure, private capital needs to
be attracted towards infrastructure development. The state would create
an enabling environment for privatisation through BOT and other
mechanisms for new assets. The PWD
and the MP Rajya Setu Nirman Nigam (MPRSNN) have introduced the
Maintain-Operate-Transfer (MOT) system on selected roads. This can be
extended to other roads and also to bridges where tolling has been
discontinued. In addition, Rehabilitation and
O&M of power, irrigation, urban utilities and transport services may
be contracted out, not only to increase efficiency, but also to free
scarce resources which may more fruitfully be used for creation of fresh
infrastructure, especially in sectors where private capital is hard to
come by.
INSTITUTIONAL STRENGTHENING OF THE FINANCE DEPARTMENT
In
addition to the above, the state government is attempting institutional
strengthening of the Finance department through a computerised MIS. This
system would link the Treasury, Budget Directorate, State Budgeting And
Fiscal Analysis Unit, Accountant General, RBI, etc. and allow the
concerned officers of the Finance Department to monitor the revenues and
expenditure position, online, on a regular basis.
|
|
|
Back.....
|
|
|
