Yogi government laggard in budgetary spend, slips on public capex

Major government departments' budget spend below 50%

Even as Uttar Pradesh is rolling out the red carpet for the private sector investments, the Yogi Adityanath government has itself failed to spur public capital expenditure (capex) in the state.

At the fag-end of its first year term, the Adityanath government has emerged as a laggard in net budgetary spending. An analysis of major public spending and infrastructure related government departments has showed that the Adityanath government could spent only about 50% of the budget. Some departments spent as low as 10% of their annual 2017-18 budget in the first 11 months of current fiscal.

The low level of public capex not only indicates lethargy on part of the concerned departments to utilise funds, but also transmits wrong signals to the private investors, especially in backdrop of the recent UP Investors Summit 2018, where the state had received investment proposals worth almost Rs 4.68 trillion.

Last month, the Adityanath government had hiked the state budget size by over 11% from Rs 3.84 trillion to over Rs 4.28 trillion for 2018-19 and allocated funds liberally for the agriculture, infrastructure, especially roads, social and energy sectors, although it has failed to utilise the existing funds.

The UP rural development department could spend only Rs 113 billion against its annual budget of almost Rs 190 billion, thus spending less than 60% of its budget. Similarly, the urban development department has so far incurred Rs 56 billion against its annual budget of Rs 105 billion, pegging utilisation at about 53%.

The state tourism department has emerged one of the most laggards utilising only 12% or Rs 3.15 billion of its annual budget of Rs 25 billion. The sugar department spent only Rs 900 million against its annual budget of over Rs 10 billion, thus putting its utilisation ratio at less than 9%.

Although, the previous state governments had also been major laggards in public capex, however, the Adityanath dispensation was expected to lead the way given, since it was helmed by a national political party, BJP, and had forged synergies with the Centre.

Meanwhile, the net spending by other major government departments stood at 37% in minor irrigation, medical education 64%, family welfare 59%, child development and nutrition 43%, public works department (PWD) 8.4%, social welfare department 35% etc.

In the ongoing UP Budget Session, the opposition parties have put stinging questions to the Adityanath government with regards to the under-utilisation of budget, which they alleged indicated the apathy of the dispensation. They had cornered the government on the issue saying only 2 week were left in the current fiscal and the concerned departments had not even issued financial approvals for the remaining budget.

Earlier, the Adityanath government had also boasted it had tamed fiscal deficit below 3% of the Gross State Domestic Product (GSDP) in 2018-19 budget as mandated under the Fiscal Responsibility and Budget Management (FRBM) Act. The fiscal deficit is estimated at 2.96% compared to 2.98% during the current fiscal 2017-18.