Commentary
Rajasthan: Why Gehlot's Reading Of Old Budget Is A Symptom Of Wider Financial Mishandling
- The Rajasthan government has displayed its utter disregard for responsible financial management by prioritising political considerations over financial prudence.
Rajasthan CM Ashok Gehlot.
The Ashok Gehlot government's budget presentation was truly a historic event, not because of its content but because of the 8-minute-long reading of last year's budget by the Chief Minister.
For 8 minutes straight, Chief Minister Gehlot read from last year's budget till he was interrupted by the Chief Whip of his party and informed about the goof-up.
The presentation caused a commotion in the assembly, with the opposition Bharatiya Janata Party (BJP) claiming that the budget had been leaked and requesting a postponement.
The assembly was adjourned twice. The Speaker expunged the proceedings from 11am to 11:42am. When the assembly reconvened, Chief Minister Gehlot apologised for the error, calling it a "human mistake".
It was to be Ashok Gehlot government's last budget before the assembly polls this year. In its entirety, it read like an election budget and indicated the short term vision of the Congress to garner votes by offering freebies.
In the budget, Gehlot announced 100 units of free electricity per month, an increase from the previous limit of 50 units. He added the state would be incurring Rs 7,000 crore on this.
Considering the financial uncertainty the state is dealing with the announcement does not augur well for the future of the state.
Following are some concerning facts that put Rajasthan's financial state in perspective.
It is one of the top five most indebted states in India.
The share of revenue expenditure in total expenditure of Rajasthan is around 90 per cent (5 year average: 2017-18 to 2021-22).
In 2021-22, the state had a high debt burden, with over 10 per cent of its income going towards paying off its debt.
In 2022-23, Rajasthan was projected to spend 56 per cent of its revenues to cover committed expenditure, living little room for it to spend on capital outlay .
The reintroduction of the 'Old Pension Scheme' in May 2022 added to the state's financial burden. The current budget promises to bring more employees under the scheme.
(The current government retirees in the state will benefit from the old pension scheme, but it will become a burden for future generations when employees who joined after 2004 start retiring from 2034. This means that the old pension scheme will help the current generation but future generations will have to pay for it.)
In Rajasthan, contingent liabilities have surpassed 5 per cent of GSDP. (Contingent liabilities refer to potential financial obligations that may arise in the future due to uncertain events. Examples of contingent liabilities include lawsuits, product warranties, and guarantees on loans given to other entities)
The Gross Fiscal Deficit to Gross State Domestic Product ratio has gone beyond 3.5 per cent. The state is spending more than it earns, by simply borrowing more money.
The Rajasthan government has displayed its utter disregard for responsible financial management by prioritising political considerations over financial prudence.
This was further emphasised by the embarrassing mistake made by CM Gehlot as he read last year's budget during the current year's budget speech, truly showcasing the extent of his concern for the state's finances.
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