Poor Fiscal Management In Himachal

Y.S. Rana

The writer is a Hamirpur based Himachali settled in Chandigarh

Increased borrowings is not an answer to bridge the resource gap that has already driven Himachal Pradesh off the fiscal performance track. The state’s dependence on borrowings is increasing despite boost in revenue over the past four years. Now the state will improve its financial health under new World Bank loan. The World Bank has come to the rescue of the state government and will suggest ‘treatment’ for its deteriorating fiscal performance.      It is revealed that the World Bank will support the state government in its efforts to spend money more efficiently by improving the financial planning, budgeting and accounting of public funds in key government departments. In the recent past, the state runs the risk of getting entangled in a ‘debt trap’ if the report of the CAG is of any indication. The report states that public debt of the state rose to Rs 27,910 crores in the previous four years. It is also stated that the overall fiscal liabilities of Himachal Pradesh increased by Rs 41,197 crore in 2015-16 in four years from Rs 28,228 crore in 2011-12 to Rs 41,197 crore in 2015-16. Besides, interest payment has also increased by 48% in the same period. The public debt increased from Rs 19,511 crore in 2011-12 to Rs 27,910 crore in 2015-16.

The World Bank support strategy for the state provides a framework to deal with the challenges of fiscal deficit and achieving rapid, inclusive growth, ensuring to drag the state out of debt trap. With a cross cutting focus on improving the effectiveness of public spending, all of which will help scale up the impact of WB assistance. In the process, the World Bank will seek to deploy its various tools-dialogue, analytical work, lending, engagement, capacity building in the most effective and efficient manner to improve the fiscal health of the State.

With higher devolution of central funds to the states, the 36 million dollar loan for the Himachal Pradesh Public Financial Management Capacity Building Programme, approved by the World Bank will truly reflect the mechanism that has to follow in designing the project to improve its fiscal performance.

World bank’s Suggestions

The support from World Bank will focus the state government put in place systems for better economic planning and budget management in four key departments—Finance, Excise and Taxation, Irrigation and Public Health and department of Information Technology. The program will help the departments put in place an architecture that will support them to execute their budget more efficiently; modernize their entire payment systems in order to reduce the turnaround time in delivering services to other departments/citizens; improve the contract management processes; scale up the IT infrastructure to provide online services to the citizens; and enable more efficient tax assessment procedures such that the revenue expenditure of the state is monitored and managed more effectively.

 “For cooperative federalism to be effective, robust financial management systems are needed at the sub-national level,” said Junaid Ahmad, World Bank Country Director in India. “This programme will build the capacity of the state both for efficient utilization of its resources as well as for collection of revenue. We expect the entire state budget to leverage its benefits over the next five years,” he added.

Financial Management Reforms

“With 60% of the public expenditure now taking place at the state level, and states’ now getting ready to introduce the Goods and Services Tax (GST), embarking on the next generation of public financial management reforms has become a necessity. This strengthening of key institutions and thus bringing about improvements in service delivery in Himachal Pradesh will be keenly watched and emulated by other state governments,” said Tanuj Mathur, Senior Financial Management Specialist and World Bank’s Task Team Leader for the programme. The $36 million loan from the International Bank for Reconstruction and Development (IBRD), has a 5-year grace period, and a maturity of 19 years.

Three Key Areas

The Government of Himachal Pradesh has already initiated several reform initiatives to improve its budget and expenditure management. This programme will help the state implement second generation financial management reforms, by focusing on three key areas.

* It will strengthen the finance department by bringing in transparency and accuracy in budget classification, establish IT-enabled budget preparation systems, and create an automated interface between the treasuries and some 4,700 departmental officials for a “paperless” and “cashless” payment system.

* The programme will focus on efficiency and performance through better contract management which will be supported through e-Procurement solutions across the state.

* The state will also strengthen and modernize the excise and taxation department. It plans to discontinue the manual system and instead roll out a software solution to improve the government’s revenue collection capacity.

Himachal-o-Meter

The state’s ups and downs this week

Palampur Civil Hospital Gets Five Dialysis Machines

Palampur: Palampur Civil Hospital has been at last equipped with dialysis facility. All thanks to Sarbat Bhala, a Patiala based charitable trust that has donated five new dialysis machines to Palampur Civil Hospital. The trust is headed by Dr S.P Singh Oberoi, an NRI settled in Dubai. Members of the trust visited the Civil Hospital recently and announced to donate these machines for public welfare with a condition that the hospital would not charge over Rs. 750 per dialysis from a patient. Dr. Vinay Mahajan, MS of the hospital, said machines were likely to be installed in June and thereafter the hospital would start providing the dialysis facility to kidney patients. Earlier, this facility was available only at the IGMC, Shimla, and the Dr. Rajendra Prasad Government Medical College at Tanda in the state. Patients visited Chandigarh and Jalandhar for dialysis. He said 100 more beds were being added to the Civil Hospital. The state government had already approved a Rs 15-crore project for the construction of a new block of the hospital which will have a capacity to accommodate 100 more patients and six new operation theatres and labs.

Two Killed, Eight Injured In A Road Accident In Solan

Solan: Two persons were killed and eights others injured when a tempo traveller they were travelling in overturned after ramming a hillock at Chamakhri Pul, near Darlaghat. Deputy Superintendent of Police Narvir Rathore said that there were 16 passengers in the vehicle, which was on its way to Manali from Shimla. The tourists hail from Visakhapatnam. According to passengers, the driver failed to negotiate a steep slope though he applied brakes. The vehicle first rammed into a hill and then overturned. The deceased were identified as Sudha and Sunita who were killed on the spot. Eight other passengers sustained injuries and were shifted to Darlaghat hospital where their condition is stated to be stable. Driver Satyaprakash was untraceable and the police were making efforts to trace him, said Rathore.

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