Government of Meghalaya

Budget Speech

2004 - 2005


Dr. Donkupar Roy

Deputy Chief Minister,
In-charge Finance

Friday the 11th June, 2004


Mr. Speaker, Sir.

I rise to recall that the Interim Budget Estimates for the year 2004-2005 were presented to this august House on the 1st day of March, 2004. It will be recalled that I had then submitted that -




"in view of the ensuing General Election to the House of the People, the Election Commission has desired that the Annual Budget be passed, or, a Vote-on-Account be taken by the State Legislatures within February, 2004, and suggested that such proposals shall not contain any new programmes or schemes. In view thereof, I now present this Interim Budget to ensure that the minimum foreseeable requirements of the State are adequately provided for, till I present the regular budget for the year 2004-2005, after the aforesaid General Election have been completed, for consideration of the Hon'ble Members during the re-assembled Budget Session".


In pursuance of my aforesaid submissions, I now present the Budget Estimates for the year 2004-2005 inclusive of the amounts passed by this august House as Vote-on-Account, on 1st March, 2004, under the Meghalaya Appropriation (Vote-on-Account) Bill, 2004 but inclusive of the amounts drawn as Advances from the Contingency Fund during the interim period commencing 1st April, 2004.


Since I had already discussed the sectoral performance and priorities of the Government in my Statement, while presenting the Interim Budget Estimates for the current year, I do not propose to repeat these today.


I shall now highlight the salient features of the Annual Accounts for the year 2002-2003 as verified by the State Accountant General and tabled in this august Houser on the 27th February, 2004.




The audit report on the Annual Accounts 2002-2003 reflects the following position :-


The year opened with a budgetary deficit of Rs.1,022.00 lakhs.


Against a total revenue of Rs.1,28,892.69 lakhs, the total revenue expenditure was Rs.1,20,454.77 lakhs resulting in a revenue surplus of rs.8,437.92 lakhs.


Against the total revenue receipts, recoveries and other receipts amounting to Rs.1,30,435.87 lakhs, the total revenue and capital expenditure was Rs.1,46,548.50 lakhs resulting in a fiscal deficit of Rs.16,112.63 lakhs.


Against the fiscal deficit of Rs.16,112.63 lakhs there was an interest payment of Rs.15,134.12 lakhs resulting in a primary deficit of Rs.978.51 lakhs.


Against a total budgetary receipt of Rs.11,16,773.83 lakhs, there was a total budgetary expenditure of Rs.11,16,238.19 lakhs resulting in a budgetary surplus of Rs.535.64 lakhs. After adjusting the deficit opening balance of Rs.1,022.00 lakhs, the budgetary deficit was Rs.486.36 lakhs.



Steps for generating additional resources and exercising stringent economy measures, including the system of Letter of Credit and Letter of Allotment, have been continued. Such measures have resulted in the budget estimates for 2003-2004 being revised as follows -


The revised estimates for the 2003-04 reflect a deficit opening balance of Rs.486.36 lakhs.


Against a revised revenue receipt of Rs.1,69,611.01 lakhs, the revised revenue expenditure is Rs.1,58,598.64 lakhs resulting in a revenue surplus of Rs.11,012.37.


Against a revised total budgetary receipt of Rs.14,53,622.47 lakhs, the revised budgetary expenditure is Rs.14,53,409.99 lakhs resulting in a budgetary surplus of Rs.212.48 lakhs. After adjusting the deficit balance of Rs.486.36 lakhs, the budgetary deficit is Rs.273.88 lakhs.



It is proposed to continue with the economy measures currently in force, besides resorting to additional resource mobilization in terms of fresh taxation proposals, which I will make later today. These are expected to result in further improvement of the State's fiscal health. The budget estimates being presented today, for the year 2004-2005, propose as follows -


A deficit opening balance of Rs.273.88 lakhs.


A total revenue receipt of Rs.1,69,269.10 lakhs against a total revenue expenditure of Rs.1,61,713,00 lakhs, resulting in a revenue surplus of Rs.7,556.10 lakhs.


Additional resources generated and attendant economy measures during the year 2004-05 will result in further savings and the year is expected to close with comfortable revenue surpluses, in conformity with the Medium Term Fiscal Reforms Programme adopted by the State, as per Memorandum of Understanding executed with the Central Government in pursuance of the recommendations of the Eleventh Finance Commission.


The total budgeted receipts during the year 2004-2005 are estimated at Rs.14,39,536.56 lakhs against a total budgeted expenditure of Rs.14,39,463.14 lakhs, resulting in a budgeted surplus of Rs.73.42 lakhs, which is likely to further improve as a consequence of the measures already stated.


As already mentioned, the Letter of Credit and Letter of Allotment system has been introduced in all Departments of the State except in relation to payments of salaries and allowances. The system has proved useful and resulted in appropriate regulation and proper control of expenditure from the public exchequer. These measures will continue.


NON-PLAN BUDGET 2004-2005.



The Non-Plan Budget Estimates for 2004-2005 envisage an outlay of Rs.1,23,903.31 lakhs. Every attempt has been made to adequately provide for normal maintenance and recurring expenses, amortization of debts and liabilities and critical maintenance cost of normalized projects. While fiscal measures to contain avoidable expenditure will continue, adequate care has been taken to ensure that critical and unavoidable segments of expenditure are protected and sufficiently provided for.


PLAN BUDGET 2004-2005.



The approved Tenth-Plan outlay is Rs.3,00,900.00 lakhs. The actual plan expenditure during 2002-03 was Rs.42,810.11 lakhs. The likely plan expenditure during 2003-04 is Rs.58,650.00. The current year's plan size is yet to be fixed by the Planning Commission. The Budget Estimates provide Rs.62,500.00 lakhs for the draft Annual Plan 2004-05. This amount has been provisionally provided in the Budget Estimates, subject to such changes as may be necessary after the Planning Commission finalizes the plan size for the State.





The year 2002-2003 opened with a deficit of Rs.1,022.00 lakhs. While the actual receipts during the year, including receipts under Public Accounts, amounted to Rs.11,16,773.83 lakhs, the corresponding expenditure was Rs.11,16,238.19 lakhs, resulting in a deficit closing balance of Rs.486.36 lakhs.





The revised estimates for the year 2003-04 reflects a deficit opening balance of Rs.486.36 lakhs. While the revised estimated receipts during the year including receipts under Public Accounts are likely to amount to Rs.14,53,622.47 lakhs, the corresponding expenditure is expected to be of the order of Rs.14,53,409.99 lakhs, resulting in an anticipated closing deficit balance of Rs.273.88 lakhs.





The estimates envisage a deficit opening balance of Rs.273.88 lakhs and total receipts, including receipts under Public Accounts, of Rs.14,39,536.56 lakhs, against a corresponding expenditure including  expenditure under Public Accounts of Rs.14,39,463.14 lakhs. This is estimates to result in reducing the deficit opening balance to Rs.200.46 lakhs.





Keeping in view the increasing revenue expenditure of the State, as a consequence of increasing debt service burden and spiraling establishment cost due to recurring increases in emoluments of Government employees, and with a view to conform to the parameters stipulated under the Medium Term Fiscal Reforms Programme to qualify for fiscal reform-related revenue gap grants from the Centre, it is necessary for the State to generate additional resources, while exercising utmost economy in avoidable expenditure. I, therefore, propose to give immediate effect to the following additional taxation measures -

To increase the existing rate of tax under the Meghalaya Finance Sales Tax Act in respect of (a) Ceramic, glazed & mosaic tiles (b) Iron & Steel Safes & Almirahs and (c) Photographic & other Cameras including electronic cameras of any kind from 8 per cent to 12 per cent.

To increase the rate of Luxury Tax on hotels and lodgings by  5 per cent on all slabs.

To increase the existing rate of Surcharge under the Meghalaya Finance Sales Tax Act, the Meghalaya Sales Tax Act and the Meghalaya Purchase Tax Act from 10 per cent to 20 per cent.

To impose a cess of Ten Rupees per metric ton on limestone and coal to generate resources for the development of education and maintenance of State roads.



The aforesaid measures are expected to generate additional resources of about Rs.1,000.00 lakhs during the year 2004-2005.



In addition to the above, the State Government has taken necessary steps for computerization of the tax administration to ensure that all liable dealers are brought within the tax net, facilitate e-filling of returns by registered dealers and enhancing the capability of the monitoring and regulatory mechanism to the desired extent.

Adequate efforts have also been taken to improve collection of non-tax revenue with particular emphasis on royalty from coal and limestone. A vigilance squad has been constituted to conduct surprise inspections in order to plug systemic loopholes and an e-initiative is being drawn up for online assessment of revenue collection.

Implementation of the Accelerated Power Development and Reforms Programme is moving ahead. The State Electricity Regulatory Commission is expected to be set up shortly. The MeSEB has been declared as a body corporate with an initial authorised capital or Rs.1,000.00 lakhs. 100 per cent metering of all electric connections is expected to be achieved by December, 2004. T & D loss is targeted to be reduced to 11% and the Average Technical and Commercial loss is expected to be contained at 20% by 2007. These measures are expected to turn the MeSEB into a profit making organization from 2007-08 onwards. 



In conclusion, it is my sincere expectation that with the fullest support of all sections of this august House, the Budget proposals that I have presented today, are unanimously carried and effectively implemented, to create conditions conducive to accelerated, harmonious and positive growth of the State economy, to fulfill the rising expectations of every Meghalayan.

With these few words, may I, Mr. Speaker, Sir commend the Budget proposals for the consideration of this august House.