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State gets Rs 819-cr deficit budget

Tobacco products, fuel, limestone to be dearer  •Liquor remains untouched

Chief Minister Mukul Sangma presents the budget for 2015-2016 at Meghalaya Legislatve Assembly on Wednesday. (ST)
Chief Minister Mukul Sangma presents the budget for 2015-2016 at Meghalaya Legislatve Assembly on Wednesday. (ST)

SHILLONG:  Chief Minister Mukul Sangma, who also holds the Finance portfolio, on Wednesday, presented a deficit budget of Rs 819 crore for 2015-16 with fresh tax proposals leading to increase in prices of petrol, diesel, clinkers, limestone, and cigarette among others to tide over the financial crunch due to the NGT ban on coal mining. The tax on clinkers and limestone will indirectly affect the price of cement.
Presenting the budget, the Chief Minister said that while the total revenue receipts excluding     borrowings and other liabilities, are estimated to be Rs 8434 crore, the estimated total expenditure excluding repayment of loans and other liabilities is Rs 9253 thereby resulting in the deficit budget of Rs  819 crore. The interest payment during 2015?16 is estimated at Rs 471 crore and pension payment at Rs 446 crore.
As per the tax and non tax proposals, the Chief Minister said that in order to generate additional resources for the state to meet various commitments, the Government has decided to withdraw the exemption of 50 paise per litre on diesel which was notified on July 1, 2011 to provide a cushion against the then steep increase in the price of diesel.
Other measures include the increase in the rate of tax on diesel from the existing rate of 12.5 % to 13.5 %, and withdrawal of 50 percent of the exemption of Rs 1.13 per litre on petrol which was notified on June 14, 2012 to provide cushion against the then steep hike in the price of petrol.
The Chief Minister also proposed increase in the rate of tax on cigarettes, cheroots, cigars, beedis and smoking mixture from the existing rate of 20 % to 27 %.
The Government has also decided to introduce a cess on clinker at Rs 20 per metric tonne as done earlier in the case of cement for the purpose of empowering the education sector.
“These measures are expected to generate additional resources to the tune of Rs 30.91 crore annually” the Chief Minister said.
In addition, the Government also proposed to enhance the rate of cess on limestone from Rs 20 to Rs 40 per metric tonne, fire clay from Rs 5 to Rs 20 per metric tonne and sillimanite from Rs 300 to Rs 350 per metric tonne for the purpose of supporting primary education.
The Chief Minister said that the most daunting task in presenting the Budget this year was  the huge revenue shortfall faced by the State due to the impact of NGT ban on coal mining. “The state’s own revenue is reduced by around Rs 600 crore annually on account of the ban”, the Chief Minister said adding that he is exploring all other possible sources to generate additional revenue. “These unforeseen challenges will only motivate us to work harder and maintain fiscal, social and economic stability”, he added.
Later, talking to reporters, the Chief Minister justified the tax imposed on clinkers, limestone and other minerals, by stating that besides generation of additional resource by the imposition of tax to boost education, the thrust is also on reclamation of environment.
The Chief Minister also said that efforts will be made to check price rise, though there will be marginal rise in the prices of petrol and diesel.
“However, even after the tax proposals, the oil prices in Meghalaya will be cheaper compared to the neighbouring states”, he said.
To a question, the Chief Minister said no fresh tax was introduced on liquor since the tax imposed in November last is still effective.
Earlier in his budget speech, the Chief Minister said that the Government resorted to a new approach for this financial year’s budget due to the recommendation of the 14th Finance Commission on the devolution of funds to the states.
He also said that with the recommendation of the 14th Finance Commission, the distinction between plan and non plan budget is no longer there in respect of transfer of resources.
In this context, the Chief Minister said that there is a need to design a balance mechanism in the investment strategy to maintain developmental momentum and achieve the growth trajectory vis- a- vis efficient investment for administrative expenditure.
He said that the state can have a maximum fiscal deficit of 3.5% in any given year. The 2015-16 state budget with a fiscal deficit of about Rs 819 crore, is around 2.8 % of GSDP, the Chief Minister said.
During 2013-14, the fiscal deficit was 1.74 % and the debt-GSDP ratio was 28.63%, which is below the ceiling of 3% and 32% respectively set by the 13th Finance Commission. During 2014-15, the debt-GSDP ratio was projected at 27.44% and the fiscal deficit at 2.2% of the GSDP. “As per the fiscal roadmap of the 14th Finance Commission, the fiscal deficit of our State is to be anchored to an annual limit of 3% of GSDP”, Sangma said.
Touching upon various departments, the Chief Minister said that ‘Destination Meghalaya’ with a focus on education and health, tourism and investments, is the priority of the Government.
Major portion of the budget  speech centered around various initiatives of the Government under Integrated Basin Development and Livelihoods Promotion Programme (IBDLP) besides Mission Green and  Green Economy.
On the law and order front, the Chief Minister said that several initiatives have been taken by the Government to address and ensure law and order in the State.
The departments like roads and bridges, power, education, sports and youth affairs, social welfare, agriculture and horticulture, water resources, soil and water conservations among others received more fund allocations.

Budget effect

Hike in fuel prices
Withdrawal of earlier exemption of 50 paise per litre on diesel
Increase in tax on diesel from existing rate of 12.5 % to 13.5 %
Withdrawal of earlier 50 percent of exemption of Rs 1.13 per litre on petrol
Tobacco products  
Tax on cigarettes, cheroots, cigars, beedis and smoking mixture from 20 % to 27 %.
Tax on mineral and other products  
Cess on clinker @ Rs 20 per metric tonne as done earlier in case of cement for empowering education sector.
Benefit:  State to get Rs 30.91 crore annually from these measures.
Tax proposal to support primary education.
Cess on limestone from Rs 20 to Rs 40 per metric tonne
Fire clay from Rs 5 to Rs 20 per metric tonne
Sillimanite from Rs 300 to Rs 350 per metric tonne

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