D.K. Malviya

Madhya Pradesh has emerged as a fast growing state of the country with outstanding achievements in development sector to its credit over last three years. The Government of India and other reputed institutions have appreciated it. A prudent fiscal management has played very significant role in these achievements.

The quality of public expenditure has significantly improved. The total committed liability of the State in terms of salary, interest payment and pension has come down from 64.21 percent of total revenue receipts in 2003-04 to 43 percent in 2006-07, substantially releasing funds for new development programmes. Salaries as percentage of total revenue receipt has significantly come down from 33.39 percent in 2003-04 to 23.19 percent in 2006-07 though the State Government has increased 31 percent D.A. for its employees and their 50 percent D.A. has been merged in basic pay. As a result of this now the employees are getting Rs. 418 crore additionally. This benefit would be given to pensioners also. The state government has also paid arrears of about Rs. 500 crore for the period 01.07.2000 to 31.03.2004.

The state government has taken final decisions on the recommendations of Brahamswaroop Committee with regard to pay scale of employees, though the recommendations were received way back in 1999. A provision of Rs. 142 crore has been made for this. Besides, the state government has made a provision of Rs. 23 crore to increase the pension to the employees who retired before 1996.

Interest payment as percentage of total revenue receipt has come down from 22.44 percent in 2003-04 to 15.65 percent in 2006-07 because the State has effectively used the Debt Swap facility and by efficient financial management.

The high cost debt from Government of India and NABARD ranging from 13 percent to 14.5 percent has been replaced/swapped with low interest market borrowings ranging from 5.85 to 6.4 percent.

Debt consolidation and relief facility recommended by the 12th Finance Commission and the low interest regime in the economy have also helped the State in keeping the interest liabilities under check releasing more funds for development programmes.

The State has been granted debt waivers of Rs. 363 crore from Government of India both in 2005-06 and in 2006-07 on account of fulfilment of the conditions laid down by the 12th Finance Commission relating to the improvement in its fiscal indicators. This facility would continue for five years continuously.

Madhya Pradesh has enacted the FRBM Act, 2005. Efforts were initiated to improve State's fiscal health as per the targets laid in the fiscal correction path. The State has surpassed the rolling targets for fiscal indicators, being monitored under FRBM, as given below: -

Fiscal deficit as percentage of GSDP has come down from a high of 7.46 percent in 2003-04 to 2.16 percent in 2006-07. The fiscal position of the State has changed from a revenue deficit of 4.56 percent of GSDP in 2003-04 to revenue surplus of 2.56 percent of GSDP in 2006-07. This revenue surplus has helped in supporting Plan Capital Expenditure of 3.72 percent of GSDP in 2006-07 despite substantial reduction in the fiscal deficit. The situation of revenue surplus has been created after a long gap and it is continuing for last three years.

Outstanding liabilities, including guarantees as a percentage of GSDP has remained stable despite increase in Plan Expenditure as percentage of GSDP going up from 5.79 percent in 2003-04 to 8.09 percent in 2006-07. The Plan Capital Expenditure as percentage of GSDP has substantially gone up from 2.72 percent in 2003-04 to 3.72 percent in 2006-07 indicating speeding up of infrastructure development in the State. The State's Own Tax Revenue receipts continue to show moderate buoyancy and have been exceeding the budget estimates.

The State government has released Rs. 36.94 crore as its share of equity for the re-capitalisation of RRBs, which has enabled these institutions to provide additional credit assistance of Rs. 200 crore in the rural economy. The State Government has also released Rs. 181.56 crore as its share for the revival of the Cooperative Credit Institutions in the State.

A grant of Rs. 51.93 crore was provided to Cooperative Credit Institutions in the State to enable them to provide crop loans at 7 percent interest rate. The State Government has also provided Rs. 65 crore to MARKFED to enable it to import fertilizers to meet the shortage in the State because of the failure of the Central Government to arrange the same.

The State Government is trying to tap all sources of finances to support Plan Expenditure. RIDF is the cheapest source of funds for the State Government at present. The State Government has made efforts to improve the utilisation of funds under it. The State has availed Rs. 499 crore under RIDF in 2006-07 and was first in the country in terms of the disbursement as a percentage of sanctioned amount and third in terms of total disbursement 2006-07.

The State Government has taken over the liabilities totalling Rs. 4164.16 crore from MPSEB and provided additional assistance of Rs.1051.95 crore to honour SLR liabilities.

The flow of the budget and payment for works has been streamlined in the Works Department taking advantage of the successful implementation of treasury computerization project. This has enabled 153.25 percent increase in disbursement of fund to the works departments in the first quarter of the current financial year. Madhya Pradesh is the first state in the country to set up Cyber treasury.

The Government has also taken decision to have a single cadre of para teachers and given them higher pay packets. It has also merged 50 percent of D.A. as Dearness Pay.

The state has an important role in creating employment opportunities for the educated youth. About 10,000 new employees have been recruited by this Government in addition to employment of 43,000 Para teachers and 700 paramedical staff on contract.