Sushil’s budget handicap

Patna: Experts feel deputy chief minister Sushil Kumar Modi has his hands tied, as he goes about the rituals of presenting the budget in the Bihar Assembly on February 27.

Experts say Sushil’s hands are tied on account of the goods and services tax (GST). “On account of prohibition and implementation of GST, two doors are closed,” Sushil admitted. “There is limited scope in transport and sand.”

He, however, insisted that 14 per cent growth in central share of taxes is assured and it would ease market borrowing.

Economists beg to differ. “The state budget was a ritual. Now it would be an even bigger one,” said one. “The truth is that the economic autonomy of states has been guillotined with GST. It’s a fact former Bengal finance minister Ashok Mitra had pointed out.”

Economist N.K. Choudhary was more direct. “The role of state finance ministers has been reduced. He has a very limited scope to raise internal revenue. He might touch petroleum till it is not included in the GST. But tax on petrol products is already very high in Bihar,” Choudhary said.

Experts said a state like Bihar would have to depend on the Centre’s ability to collect central GST. “The state will collect its own GST, but the amount won’t be substantial. If we want to raise another Rs 10,000 crore it’s going to be tough. If we want to raise or reduce taxes on any thing we’ve to send a proposal to the GST council,” an economist said.

Sushil is likely to present a budget of over Rs 1.77 lakh crore. “He can always prioritise in accordance with funds available through central taxes,” said another economist.

RJD leader Abdul Bari Siddiqui, who presented last year’s state budget, had raised tax on several items to offset the around-Rs 5,000 crore deficit because of prohibition. “Earlier, we raised taxes according to nature of the local market. But now it is like equating Mumbai with a rural market in Bihar.”

He said he had opposed GST because it took away the state’s economic autonomy. Now, each state will have to plead with the Centre for funds, instead of raising its own resources.

Courtesy: The Telegraph