The Yogi Adityanath-led BJP government in Uttar Pradesh is all set to present its annual spending budget 2021-22 on Monday. This will be the final spending budget of the BJP government ahead of the state goes to polls early next year. While the spending budget is anticipated to be relatively populist in nature, it is most likely to largely stick to the trend set by the Union government and prioritise infrastructure, overall health, MSMEs and ability improvement.
With Covid-19 creating further stress on heath sector, the government is most likely to make a big boost in allocation in overall health sector. The short-term measures to upgrade overall health infrastructure to cope with Covid are most likely to be institutionalised and produced permanent. This could include things like covering the expense of vaccines in this spending budget and also upgrading the infrastructure of hospitals.
With Prime Minister Narendra Modi exhorting states to synchronise their budgets with that of the Centre in order to take complete benefit of the production linked incentives (PLI) schemes announced to increase manufacturing in the wake of Covid, the UP spending budget, also, is most likely to see a lot of action on that front.
The infrastructure sector, also, is most likely to stay in concentrate, with stress for funding road constructing and highways, specifically with the state government rolling out its ambitious Ganga Expressway project. The Agri sector, also, is most likely to see enhanced allocation, with the government most likely to make provisions for clearing the cane dues of government cooperative sugar mills.
Arvind Mohan, professor of economics, Lucknow University feels that UP has completed comparatively nicely than lots of other states in the nation largely due to the fact it was one of the handful of states that realised early on that this was not merely a overall health challenge but a a great deal larger financial challenge.
“As a result, it undertook many strategic policy decisions, such as opening up liquor vends earlier than others. The results have shown a significant increase in revenue collections,” he stated, adding that the income surge has offered UP more fiscal space, as compared to most states in India.
“Fiscal deficit will definitely be pressure on UP too, largely because the central collections have gone down. This will be marginally compensated by the state’s own performance. UP has managed its tax collections very well. Tax flows from UP’s OTR sources have shown very interesting results, with a significant rise in GST collections, excise receipts and a similar rise in stamp and registration collection and in transportation-related revenues. While significant fiscal deficit pressures would still remain, but it will be much lesser than what we saw in the case of GoI, where the fiscal deficit jumped to 9.5%,” he says adding that he anticipates the state’s fiscal deficit in FY21 to be about 5%.