In the backdrop of huge financial mismatch of the government of Assam on one hand and a pre-budget apprehension of tough stand on the part of Union Finance Minister Sri Yashwant Sinha in his Central Budget formulation on the other, it was largely expected that the Chief Minister of Assam, Sri Prafulla Kumar Mahanta who also happens to be the Finance Minister, would come out with a suitable hardline in his fourth consecutive and the maiden millennium State Budget for the fiscal 2000-2001 presented to Legislative Assembly in the evening hours of March 10, 2000 to face the reality of unfriendly situation created by long drawn fiscal doldrums. However, Sri Mahanta’s budget formulation has falsified such expectation or, rather, apprehension of people. In view of State elections round the corner, the Chief Minister’s budget for 2000-2001 appears to be designed more on political matrix of the electorate than on economic considerations. The budget figures present a deplorable State of financial discipline. Though revenue receipts in the current fiscal year is expected to rise by Rs. 272 crore over the budget estimates due mainly to administrative pressure on better tax compliance, the revenue expenditure will rise by more than Rs. 500 crore. However, the total expenses of the current year, as the revised estimate projects, will touch a Rs. 11,064 crore mark as against the total receipts of Rs. 10,187 crore, leaving, thereby, an adverse balance of Rs. 877 crore.

The new millennium year expects a 15 percent rise in total receipts at Rs. 11,773 crore and estimates the total expenditure to rise by a similar percentage to the tune of Rs. 12,628 crore, which will leave an additional revenue gap of Rs. 855 crore. Thus, when opening adverse balance in the budget is added to additional revenue shortfall that would be newly created, the State budget for 2000-2001 is expected to end up with an unprecedented uncovered deficit of Rs. 1,841 crore. Of the total receipts of the State’s consolidated fund, the administrative expenditure including the outgo on account of salaries, wages and pension liability will claim around 70 percent. The debt servicing on ever increasing public borrowings, now running at more than Rs. 7000 crore would claim another 20 per cent of the total expected receipts of the State. This would leave only around 10 per cent of the available resources for development activities of the State. Such funds-starving situation notwithstanding, the Chief Minister has preferred to refrain from any additional tax effort or from any package of resource diversion through reduction of non-essential subsidy expenditure to more essential development needs. Though the Chief Minister in his budget speech has virtually expressed his helplessness on the State of dwindling resource base, one fails to understand why he opted for a tax free populist budget letting loose the adverse balance to rise to such an unmanageable degree. Though Sri Mahanta’s basket of budget proposals does not hold any fresh tax effort, he expects to augment revenue collection by broadening the existing tax base, strengthening measures to curb and contain tax evasion and making tax administration more effective, efficient and result-oriented.

However, what type of specific measures would be used to achieve this optimism has not been identified in the budget. To bridge the huge uncovered deficit created in the budget, on the other hand, the Chief Minister appears to squarely bank on special financial assistance he has sought from the Centre and a moratorium on existing quantum of Central loan assistance, in addition to enforcement of austerity measures in State expenditure. However, if the experience of his earlier approaches to the Centre for such type of special relief to bail the State out of its financial mess is any guide, the fulfilment of his expectation will certainly remain wide open to doubt. The same may be said of the austerity measures which are promised in every year’s budget but which turn later on into a thing of the forgotten past. However, some steps of the CM in his budget formulation are praiseworthy. Firstly, to arrest further deterioration of the State’s finances, his government in consultation with the Ministry of Finance of the Government of India, has decided to adopt a fiscal reform programme. The sooner it is taken up, the better it is. Secondly, the proposed creation of Assam Infrastructure Development Fund with the help of 10 per cent of oil royalty collection and dividend earnings from Numaligarh refinery will certainly help financing infrastructure development of the State. Thirdly, the two important bills, viz., the "Assam Taxation (Settlement of Disputes) Bill" and the "Assam Protection of Interest of Depositors Bill", proposed to be introduced are certainly bold steps to quicken recovery of arrear tax revenue and safeguard the interest of investors from the clutches of non-banking financial companies respectively.