Delhi Beats The Heat & How
Which states will perform best on social and physical infrastructure indicators in coming years? The reason we pose this question: states which look like goners (Orissa, Bihar) are actually not, at least fiscally speaking. While some that appear to be in good shape today are perhaps headed for trouble; Punjab and Kerala.
IndiaSpend’s Dhritiman Gupta looks at Delhi’s latest Budget (2012) statement to discover that not only are the state’s fundamentals strong on a relative basis but getting stronger.
This should help a state fund its ambitious Rs 90,000 crore outlay (up 64% from the previous plan) for the 12th Plan (2012-17). Of this, social services outlay is going up 111%.
It could thus be argued that a Delhi resident has better times to look forward to, at least from a balance sheet perspective. It could also be argued that Delhi is getting hotter (45 C as we write but that’s another story)
Good Per-capita Income
And here’s the reason for the optimism. In 2011-12, Delhi grew at 11.3% as against a national growth rate of 6.9%. During the 11th plan period, 2007-12, Delhi grew at 11.46% while India grew at 7.94%. The state’s per-capita income of Delhi 2011-12 was estimated to be Rs 1.76 lakh, almost 3 times the national level figure of Rs 60,972.
Tax collections have been strong, growing at 21.2% in 2011-12. This is all the more impressive because of the slowing down of Value Added Tax (VAT) collections to 14%. The Budget statement attributes this to the economic slowdown.
This slowdown was compensated by a smart growth in Stamps and Registration Fees (65%) Motor Vehicle Tax (48%) and State Excise (25%). Targeted tax collections for 2012-13 are Rs 26, 150 crore, a whopping 31% growth rate over last year.
Delhi’s Debt Under Control
Delhi’s debt book, at least in contrast to other states, is in good shape. Delhi, unlike other states, reduced its outstanding debt from Rs 30,140 crore at end March 2011, to Rs 29,608 crore at end March, 2012. The debt-GSDP ratio (Gross State Domestic Product) in 2011-12 was 9.43%, the lowest in the whole of India.
The fiscal deficit in 2011-12 was Rs 3,177 crore or 1.01% of the GSDP. According to budget estimates the fiscal deficit would be reduced to Rs 2,604 crore in 2012-13, which if Delhi continues to grow at 11.3% would be 0.75% of GSDP- a very comfortable number.
Delhi Budget 2012 Highlights
The proposed budgeted expenditure for 2012-13 is Rs 33,436 crore. Of this only Rs 1,928 will be met from Central grants, the remaining 94% coming from the states own resources.
Given a somewhat easy financial situation, Delhi can perhaps afford to make non-plan grants to public utilities and municipal bodies, which it has provided for in the budget. And which are not in such good shape.
Budget 2012 has set aside Rs 600 crore (not surprisingly, some may say) for the Delhi Transport Corporation (DTC), grappling with, among other things, a low fare base.
Incidentally, two weeks ago, 1,000 DTC contractual drivers struck work after the management put them on minimum wages of Rs 300 per day. Earlier, wages used to depend on the number of kilometres covered during a day.
Delhi Urban Shelter Improvement Board (DUSIB) is also looking out for funds and accordingly Rs 60 crore has been set aside in form of grants for the board.
The Municipal Corporation of Delhi (MCD) has been very recently trifurcated into, North, East and South Delhi Municipal Corporations for better governance. Given the poor financial condition of the MCD, this might help.
Loans to the tune of Rs 1,831 crore have been set aside for these 3 bodies. Besides these loans, there are plan outlays of Rs 1,746 crore and devolution of Rs 2,400 crore to local bodies.
Schemes To Start This Year
Let’s now look at some of the schemes the government plans to start from this year.
This fiscal the state is launching a new food security scheme called “Dilli Annashree Scheme”. Under this scheme the government will provide food subsidy in form of direct cash transfer of Rs 600 per month to vulnerable households not covered by BPL cards or food supply under the Annapurna/Antodaya Yojana. Rs 150 crore has been set aside for this scheme.
Some 1.75 lakh households in Delhi still use kerosene for cooking. The government is giving a onetime subsidy of Rs 2,000 to these households to buy a gas stove and switch to a LPG connection. Rs 40 crore has been set aside in 2012-13 for this scheme.
Delhi has launched a skill up gradation and employment intuitive for SC, ST, and OBC called “Delhi Swarojgar Yojana for SC/ST/Minorities/OBC”. Under this scheme the government will provide loans to the tune of Rs 5 lakh to entrepreneurs willing to set up a venture in Delhi. An amount of Rs. 50 crore has been set aside for this scheme in 2012-13.
The government has planned to give Rs 1,000 per month to poor people afflicted with HIV/AIDS for anti-retroviral treatment. The amount would be Rs 2,050 per month for orphaned children infected with the disease and Rs. 1,750 per month for orphaned children affected by it. An amount of Rs 5 crore has been set aside for this scheme.
A cash subsidy to buy writing material/stationary has been proposed. Students from class 1 to 5 will get Rs 300 per annum. Students from 6 to 8 will get Rs. 400 per annum. It will cost the state exchequer Rs 30 crore in 2012-13.
12th Plan Outlay Up 64%
As we mentioned earlier, Delhi grew at 11.46% during the 11th five-year plan. The good news is that growth for the 12th plan is projected to be 11.5 %.
The outlay for the 12th plan period has risen to 90,000 crore from Rs. 54,799 crore during the 11th plan; up 64%. Social services will see a 111 % hike in spends.
Delhi is usually sniggered upon for receiving too many Central handouts. That may be true but as the numbers show; the state has done a good job of managing its books too. Not something too many states, large or small can boast of.
