Himachal Pradesh Public Finance and fiscal Policy
In public finance we study the finances of the Government. Thus, public finance deals with the question how the Government raises its resources to meet its ever-rising expenditure. As Dalton puts it, public finance is concerned with the income and expenditure of public authorities and with the adjustment of one to the other.
On the other hand, Fiscal policy is the means by which a government adjusts its spending levels and tax rates to monitor and influence a nation’s economy. It is the sister strategy to monetary policy through which a central bank influences a nation’s money supply.
Generally following are the objectives of a fiscal policy in a developing economy:
- Full employment
- Price stability
- Accelerating the rate of economic development
- Optimum allocation of resources
- Equitable distribution of income and wealth
- Economic stability
- Capital formation and growth
- Encouraging investment
STATE INCOME AND PUBLIC FINANCE
According to quick estimates, the total State Domestic Product for the year 2015-16 is 96,289 crore against 89,095 crore in 2014-15 thereby registering a growth of 8.1 percent at constant prices.
As per the quick estimates the value of Gross State Domestic Product of the Pradesh at current prices which was estimated at1,04,177 crore for 2014-15(Provisional estimates) increased to 1,13,667 crore during 2015-16, registering an increase of about 9.1 percent. This increase is attributed to the agriculture & allied activities sector besides other sectors of the economy. The food grains production increased to 16.34 lakh MT in 2015-16 from 16.08 lakh MT in 2014-15 and also the production of apple increased to 7.77 lakh MT in 2015-16 from 6.25 lakh MT in 2014-15.
The growth of economy of Himachal Pradesh during the last three years:-
Year . Percent
2013-2014 7.1
2014-2015 7.5
2015-2016 8.1
Receipt and Expenditure of the State Government (% of GSDP)
Item 2013-14 2014-15 2015-16 2016-17
1.Revenue Receipts 16.58 17.13 21.57 21.09
5.Revenue Expenditure 18.31 18.99 21.79 21.47
6.Revenue Deficit/ surplus – 1.73 -1.87 -0.22 – 0.38
(Revenue Receipts- Revenue Expenditure)
7.Capital Receipts 4.87 12.72 4.23 4.90
8.Capital Expenditure 4.32 10.76 4.61 4.69
9.Total Expenditure 22.63 29.75 26.39 26.16
Plan expenditure 4.97 5.84 6.58 6.20
Non-plan expenditure 17.66 23.91 19.81 19.96
According to the budget estimates for the year 2016-17 the total revenue receipts were estimated at 26,270 crore as against 24,514 crore in 2015-16. The revenue receipts increased by 7.16 percent in 2016-17 over 2015-16. The State’s own taxes was estimated 16.78 percent more in 2016-17 as against 2015-16 .
The State’s non-tax revenue (comprising mainly of interest receipts, power receipts,road transport receipts and otheradministrative service etc.) was estimated at 1,668 crore in 2016-17. The State’s non taxrevenue was 6.35 percent of totalrevenue receipts in 2016-17.
The share of central taxes is estimated at 4,334 crore in 2016-17.
Sectoral Contribution
The sectoral analysis reveals that during 2015-16, the percentage contribution of Primary Sector to total GSDP of the State is 14.90 percent ,Secondary Sector 41.14 percent,Transport, Communications and Trade12.09 percent and Finance and Real Estate 15.88 percent, Community andPersonal Services is 16.00 percent.
State economy witnessed significant changes during the decade.The share of agriculture including horticulture and animal husbandry in GSDP had declined from 21.1 percent in 2000-01 to 9.4 percent in 2015-16,yet the agriculture sector continues to occupy a significant place in the state economy.
Secondary sector,which occupies the second important place in the state economy has witnessed a major improvement since1990-91. Its contribution increased from 26.5 percent in 1990-91 to 41.1 percentin 2015-16, reflecting healthy signs of industrialisation and modernisation in the State.
As per the advance estimates based on the economic performance of State upto December,2016, the rate of economic growth of State during 2016-17 is likely to be 6.8 percent. A brief analysis of the economic growth in Himachal Pradesh, however, reveals that the State has always tried to keep pace with the all-India growth rate.
Financial Inclusion:
The financial inclusion denotes delivery of financial services at an affordable cost to the vast section of the disadvantaged and low income group. For this purpose, a comprehensive Financial Inclusion Campaign- “Pradhan Mantri Jan Dhan Yojana” (PMJDY) launched through out the country on 28th August, 2014 to cover the excluded section of society Yojana (PMJDY) launched through out the country on 28th August, 2014 to cover the excluded section of society. Banks have opened total 9,86,817 Basic Saving Bank Deposit Accounts (BSBDA) under the scheme.
RBI Roadmap 2013-16
In RBI Roadmap, total 18,948 villages with population below2,000 are covered by banks through opening of Brick & Mortar branch andfixed location Business Correspondents agents (called BankMitra) outlets as of September,2016.
The financial targets under Annual Credit Plan 2016-17 was increased by 21 percent over the last plan outlay and fixed at 18,213.01crore. Under Annual Credit Plan 2016-17, Banks have disbursed afresh credit to the tune of 7,858.34crore upto half year ended September,2016 and achieved 43 percent of Annual commitment.