Increase in central devolutions for the current fiscal and next fiscal is likely to give a more room to increase the size of Bihar’s budget for financial year 2023-24, to be presented on February 28, state’s finance department officials said.
The budget size could increase by 5-7% compared to the current budget size of ₹2.37 lakh crore, they said, adding that education, rural development, health and agriculture would be the focus areas.
The union budget, tabled in Parliament on Wednesday, revised estimates of central devolutions to Bihar for the current fiscal at ₹95,509 crore from the previous ₹91,000 crore while the devolutions (state’s share in central taxes) for the next fiscal have been estimated at ₹1.03 lakh crore.
Officials, not willing to be identified, said the relief, however, will be offset by the discontinuation of GST (goods and services tax) compensation to states from the last financial year, which has hit the state kitty.
Bihar’s finance minister Vijay Kumar Choudhary had demanded that the GST compensation for states be extended for another five years.
On an average, Bihar had been getting ₹7,000-8,000 crore for five years from 2017-22 in GST compensation to cover the loss of revenue due to the implementation of the new tax regime in 2017.
The state, which is highly dependent on central devolutions, has so far got around ₹66,000 crore as against the previous estimate of ₹91,000 crore for the current fiscal ( 2022-23), officials said.
Amit Bakshi, assistant professor at Centre for Economic Policy and Public finance, a body formed in collaboration with the state government, said projected central devolutions for the next financial year were not very high compared to the last few years and asserted that the state would also get much less in terms of grants in the next fiscal as per projections in the union budget. “The slash allocation for the central rural job guarantee scheme MGNREGS and other schemes would also adversely affect Bihar, where the number of unskilled labourers and joblessness in rural areas is high,” he said.
Additional chief secretary (finance) S Siddharth could not be reached for his response.
