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Business News/ Opinion / Online Views/  Inequality, disparity will grow

Inequality, disparity will grow

Emerging states such as Odisha have been given a raw deal by the 14th Finance Commission and the national budget

A file photo of Prime Minister Narendra Modi and finance minister Arun Jaitley. Photo: PTI (PTI)Premium
A file photo of Prime Minister Narendra Modi and finance minister Arun Jaitley. Photo: PTI

Finance minister Arun Jaitley, while presenting Budget 2015, congratulated himself stating that the credibility of the Indian economy has been re-established and that it is about to take off on a fast growth trajectory. He said inflation has declined. But don’t we know this has happened because of the lowering of prices of crude oil in the international market? What is the initiative of the Union government? Nothing. Rather, the benefit of the lowering of price of crude oil has not passed on to consumers. A simple comparison of gas price in the US and that of oil per litre here speaks volumes.

Growth is back, says the finance minister. Are we not aware that the outlook for the world economy remains subdued, despite the steep drop in prices of oil and other commodities? When Chinese growth is expected to slow further to below 7%, Japan is unlikely to boom and the stagnant European economy is burdened by legacy problems, is our economy in such trajectory that it will take off? I have my doubts. It is only the US that is recovering steadily. But global growth in 2015 is projected to be a modest 2.5%.

The greater focus has been to revive our manufacturing sector. It needs support to compete in the markets which are flooded with goods from China, Malaysia and some other Asian countries. There was a need to encourage and support the manufacturing sector and to make Make in India successful. This is a welcome step no doubt, but adequate support is required for the handloom industry, which seems to have been totally ignored. After agriculture, it is the handloom sector which provides the highest employment to our people.

The budget has shown a vision for 2022 but there is no matching action or financial commitment. Greater faith has been put on foreign capital which is thought to bring in greater change in our economy. Conveniently, the problem of the fall in the domestic savings has been forgotten. Little steps have been taken to increase our domestic savings, which has actually saved us from the meltdown in 2007-08.

Budget 2015 is the first year of the Fourteenth Finance Commission award period with a steep jump in states’ share of taxes from 32% to 42% of the gross tax revenue divisible pool. Some states have gained no doubt but percentage and actual-wise, states such as Odisha are getting less than that was being provided earlier. Odisha’s share in tax devolution will come down from 4.78% to 4.60%. This involves a loss of 4,600 crore over five years. This is because of the inclusion of new criteria such as demographic changes, that is population as per the 2011 census, and deletion of the criteria of fiscal discipline.

Why should Odisha be punished for having exceptional achievement in containing fiscal deficit parameters which is much better than most other states? Why should Odisha be penalized because of good governance in fiscal discipline and population stabilization initiatives? Why should we lose funds when we have done well in these parameters? Is it because Odisha took steps to stabilize its population? Is it because Odisha had managed its fiscal responsibility well? Should Odisha lose thousands of crores for doing the right thing? This is the blow which Odisha got from the Fourteenth Finance Commission and now from Budget 2015.

It is learnt that centrally sponsored schemes such as the Backward Regions Grant Fund and setting up model schools have been abandoned. Odisha, for instance, has been insisting on special category status. Earlier, the Kalahandi Balangir Koraput region was provided with special funds, which were discontinued some years back by the second administration of the United Progressive Alliance government. The region is most impoverished and also affected by leftwing extremism. The grant fund was a supporting fund to take up developmental work. Now it is left to the state government to do the needful. The Union government, it seems, has no responsibility. On according special category status, the finance minister has said in his budget speech that the finance commission has not distinguished between special category and other states. Yet, Andhra Pradesh is going to get special assistance. Also Bihar and West Bengal.

When Prime Minister Narendra Modi is proclaiming that eastern India would get adequate support, and the finance minister says eastern states have to be given an opportunity to grow even faster, why then is Odisha being discriminated against? Isn’t Odisha part of eastern India?

On the whole, emerging states such as Odisha have been given a raw deal by the fourteenth finance commission and the national budget. This was not expected.

Bhartruhari Mahtab is Biju Janata Dal parliamentary party leader in the Lok Sabha.

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Published: 01 Mar 2015, 01:12 AM IST
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