Issue 57 Vol III, February 15, 2008

A N A L Y S I S

Haryana moves up

Haryana is currently witnessing an increase in its revenue generation and consequent its capacity to spend more on public welfare programmes. During the past three years. At one level, the flow of investment into the state in view of congenial and industry-friendly approach of the Congress government lead by Bhupinder Singh Hooda has contributed to the increase in the revenue generation. There has been substantial increase in revenue collection. This has emboldened te chief minister to declare to touch more than 12 per cent growth. The current power shortage is one major handicap in achieving this target.

Overall revenue collection has gone up to Rs 19,186 crore during 2007-08 against Rs 17,952 crore in 2006-07. The revenue collection has been increasing from 2003-04, when the total revenue was Rs 9,843 crore. It went up to Rs 11,149 crore in 2004-05 and Rs 13, 853 crore in 2005-06. In 2007-08 the revenue collection would be almost the double of that in 2003-04.

The major contributor to revenue had been VAT. The state collected Rs 6,708 crore VAT in 2007-08 as against Rs 5,312 crore in 2006-07, which worked out to about 25 per cent. Revenue collection from other sources also went up all these years. In 2003-04, revenue from excise duty collection was Rs 923 crore which went up to Rs 1,013 crore in 2004-05, Rs 1,107 crore in 2005-06 and Rs 1,350 crore in 2007-08. The new excise policy was also a major factor of this increase in the revenue generation.

Likewise in stamp duty collection the state saw a big push as revenue went up from Rs 696 crore in 2003-04 to Rs 727 crore in 2004-05, Rs 1,340 crore in 2005-06, Rs 1,765 crore in 2006-07 and Rs 2,000 crore in 2007-08 while non-tax revenue saw a surge from Rs 144 crore in 2003-04 to Rs 318 crore in 2004-05, Rs 714 crore in 2005-06, Rs 2,562 crore in 2006-07 and Rs 1,900 crore in 2007-08.

The 11th Finance Commission had suggested the Medium Terms Fiscal Reforms Plan and by adopting the same, the state received an incentive grant of Rs 55.17 crore and debt relief of Rs 74.48 crore in March 2005.  On the recommendation of the 12th Finance Commission, the state enacted the Fiscal Responsibility and Budget Management (FRBM) Act in 2005. In pursuance of the FRBM Act, 2005, the scheme of rescheduling central loans and reducing interest rate to 7.5 per cent would provide a financial benefit to the state to the extent of Rs 645.96 crore during the five years from 2005-10, comprising less repayment by Rs 258.30 crore and interest relief of Rs.387.66 crore.

Haryana would also be eligible to receive the benefit of Rs 581.43 crore on account of the Debt Waiver Scheme under which all the repayment of the central government loans for 2005-10. The state was targeting 12 per cent growth in the gross state domestic product (GSDP) in 2007-08 which would be above the national growth rate pegged at about 9 per cent. According to advance estimates, the GSDP of Haryana at constant (1999-2000) prices for 2007-08 was estimated at Rs 1, 01,319.42 crore.

An upbeat government has constituted a resource mobilization committee to add more its coffers.

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Employment in farm sector: no boon
Dr. S.S. Chhina

THE importance of agriculture in India’s economy is well recognized. 70 percent of the population depends on this profession; the planners initially did concentrate on this sector but of late this sector has been facing a serious crisis. A statement by the Union Finance Minister P. Chidambaram to further reduce the rate of agriculture credit to encourage investment in this sector from the outset sounds like an encouraging step to promote employment and production in Agriculture.

The economic indicators show that 75 persons are dependent on every 100 employed persons in the country, whereas in all the developed countries of the world this ratio is below 43 persons.  Even in Sri Lanka, there are only 46 persons dependent on 100 persons.  According to the economic experts, for the smooth and rapid development of any economy, this ratio should be below 50 persons.  But this problem of dependent persons is largely related to the agricultural sector, where underemployment is more prevalent in the form of disguised unemployment.  In other sectors, unemployment is visible, but being disguised unemployment, the income is low in the agriculture sector, and for the people, who produce prosperity, it becomes a burden.

There is another feature of the employment situation in India that in this modern era of mechanization, privatization and liberalization; most of the production is now obtained in large scale units using specialized machines which end up replacing labour, making them further unemployed. Though the rate of development has been around 8 per cent in the last decade, it still has not solved the problem of unemployment; rather the problem has further intensified. MNCs replace labour with machines and this unemployed population has no alternative than to look for employment in agriculture.

Another feature of unemployment in India is that there are more job opportunities for children than for adults. A number of jobs, which actually should be performed by adults, are performed by children and that further adds to the woes of an adult who is unemployed. There is a negative correlation between development and child labour, and positive correlation between inequalities in income. As inequalities in the country increase, the quantum of child labour also increases.  It is quite evident that though the quantum of work obtained from children is equal to the work of adults, their pay is about half of an adult.

Some economists are of the view that though India is an overpopulated country, the major obstacles are not population instead it is improper and unplanned industrialization. The density of population in England, Germany and Japan is much higher than India, but all these three countries are among the 10 richest countries in the world. The per capita income of these countries is about 100 times more than that of India. It is because 80 per cent of their population is employed in industries. In 57 years of planning, India has not been able to shift from agriculture to industries and still the addition of jobs in industries is less than the growth rate of population.

Because of this increasing burden on agriculture, the average size of the holding that was 7.5 acres in 1960 decreased to 6 acres in 1971-72 and further to 5 acres in 1991. It has now decreased to 3.75 acres.

In 1991, there were 37 per cent of marginal holdings with 2.5 acres of land, but now its number has increased to 56 per cent. There are only 18 per cent holdings above 5 acres. There are 26 per cent holdings in the size group of 2-5 acres, so 82 per cent of the holdings are below 5 acres and almost all these families have more than 5 members, but most of them face the problem of unemployment.

The per capita holding loan is about Rs. 42,000 in Punjab. Already 7 per cent rate of interest is charged for an agricultural loan, further reduction in the rate of interest is an encouraging step, because it would increase the investment in this sector that would promote employment. State patronization is also required in the field of agricultural marketing. The farmers are not growing crops where assured marketing is not available. Though oil seeds and pulses are imported from other countries, very heavy prices are paid for their import, but farmers are still not growing these crops due to the uncertainty in their marketing. These crops can be grown very easily, only assured marketing and reasonable prices should be guaranteed by the state. Yet that remains a tall task.

(Dr SS Chhina, 72 sector 4, Ranjit Avenue, Amritsar, Punjab)

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