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Explained: Reserve Fund, ‘V’-shape recovery and other aims of Haryana Budget 2021

Haryana Budget 2021: What is MTEF and the V-shape recovery that the government is aiming to recover from the Covid-19 impact on the state's economy?

Written by Varinder Bhatia , Edited by Explained Desk | Chandigarh |
Updated: March 14, 2021 8:07:08 am
haryana budget, haryana budget 2021, haryana budget explained, Medium Term Expenditure Framework, MTEF, V shape recovery explained, indian express explained, indian expressHaryana Chief Minister Manohar Lal Khattar arrives to present the state's budget for the financial year 2021-2022 in the state assembly, in Chandigarh. (PTI Photo)

Amid the threat of a fresh surge in new Covid-19 cases, Haryana Chief Minister Manohar Lal Khattar proposed a budget of Rs 1.55 lakh crore for financial year 2021-22. Launching a Medium Term Expenditure Framework (MTEF) of a flexible Rs 8,585 crore and aiming a V-shape recovery, Khattar said that the prime focus of the government in the coming financial year shall be to build a resilient and resurgent Haryana. Not many sops have been offered in the budget presented Friday, while the state’s debt continues to mount and has reached almost Rs 2 lakh crore.

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What is MTEF and the V-shape recovery that the government is aiming to recover from the Covid-19 impact on the state’s economy?

What is the MTEF that the state government has proposed in the budget?

Khattar said Medium Term Expenditure Framework is “a paradigm shift in state’s architecture by allocating an untied fund of Rs 8,585 crore”. The state also intends to utilise the resources earmarked under MTEF this year on the special projects with health, agriculture and infrastructure development as its core areas.

The state government feels MTEF will improve uncertainty of allocations and ensure that projects are planned in a proper and sustainable manner. Another significant advantage of having a reserve fund will mean flexibility to allocate funds for projects that are anchored in multiple sectors with a focus on priority areas. While regular allocations will follow the conventional annual timeframe, the MTEF will be anchored in a specially created reserve fund that will have the facility of rollover of allocations across years. The MTEF Reserve Fund will present the roll over allocations in every annual budget with justifications and until be approved by the Vidhan Sabha.

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What are the projects that the state government will focus on in the coming year?

Orbital Rail Corridor, asset monetisation through Infrastructure Investment Trusts and Real Estate Investment Trusts are the key aims. Under the Orbital Rail Corridor, the 122-km electrified double railway line will bypass Sohna-Manesar-Kharkhoda-Delhi and connect Palwal to Harsana Kalan.

This line will serve as a feeder line for a Dedicated-Freight-Corridor (DFC) contributing to industrial growth in the state. Besides this, the government’s core focus will be on developing a global city near Manesar and International Horticulture Market at Ganaur in Sonipat.

The other special projects under focus shall include expanding medical infrastructure such as upgrading district hospitals to 200 bed facilities, establishing mother and child hospitals, biosafety laboratories, apple market in Pinjore, spices market in Sera (Sonipat), micro irrigation projects, high-speed rail connectivity between Delhi and Karnal, expanding the metro network in Gurugram and other areas.

What is the government’s V-shape recovery mode?

Due to Covid-19 pandemic, there has been a contraction in all-India GDP of 7.96 per cent in 2020-21. As compared to this, in case of Haryana, 5.65 per cent contraction has been recorded in the GSDP in 2020-21. The national per capita income at current prices was Rs 86,647 in 2014-15, which increased to Rs 1,34,186 in 2019-20, whereas for Haryana, it increased from Rs 1,47,382 in 2014-15 to Rs 2,47,628 in 2019-20. The per capita income at all-India level declined to Rs 1,27,768 and in case of Haryana to Rs 2,39,535 in the year 2020-21.

Khattar said the V-shape recovery of the state to get out of the adverse financial impact due to Covid-19 will be based on four pillars. These include prioritisation of key areas, creation of MTEF Reserve Fund, outcome-led growth and focus on implementation. To begin with, the government has identified key areas as health, agriculture and infrastructure development. The government will be focusing especially on MSMEs, and to enhance the capabilities and capacities of MSMEs, the government will focus on five core areas — Aerospace & Defence, Toy Industry, Services sector, Construction and Industrial Parks.

How Haryana is shifting from agrarian to industrial state, a key economic reform area for the government?

In the gradual transformation of Haryana from agrarian to industrial state, the services sector has played a major role. The share of services sector in total Gross State Value Added (GSVA) has increased from 44.9 per cent in 2011-12 to 51.1 per cent in 2019-20. In 2020-21, while the share of the primary sector has increased to 19.1 per cent, the share of the secondary sector and the tertiary sector stood at 30.0 per cent and 50.9 per cent, respectively.

Primary sector: In 2019-20, agriculture and allied activities contributed 98.96 per cent and the mining sector held the remaining share (1.04 per cent). Secondary sector: The manufacturing and construction sectors have evolved as major contributors. The share of manufacturing sector in total secondary sector for the year 2019-20 was 70.99 per cent whereas the share of construction sector was 25.21 per cent. The share of the manufacturing sector has gradually increased from 61.61 per cent in 2011-12 to 70.99 per cent in 2019-20 demonstrating the transformation. Tertiary sector: The sharp rise in tertiary sector in Haryana was mainly on account of two distinct groups of services. The first group consisting of ‘real estate, ownership of dwelling and professional services’ followed by another group consisting of ‘trade, repairs, hotels, and restaurants’. These two, real-estate and trade, together constitute 64.2 per cent of the total tertiary sector.

Specifically, the ‘real estate, ownership of dwelling and professional services group’ holds the highest share with an increasing trend as its share has increased from 33.30 per cent in 2011-12 to 34.02 per cent in 2019-20 while the ‘trade, repairs, hotels, and restaurants group’ holds the second highest share increasing from 26.93 per cent to 30.14 per cent during the same period.

How does the government aim to double farmers’ income?

Although the budget mentions the government’s “commitment” to double farmers’ income, it does not specify the current income of farmers and how the government is going to double it. However, the overall policies that it is focussing on is being claimed by the government as key factors that will give a boost to farmers’ income . These include programmes with a focus on major areas such as soil health management, integrated nutrient management, pest management, availability of quality inputs (fertilizer, seeds, pesticides); reclamation of alkaline and saline water-logged soils; construction of water harvesting structures; on-farm water management; promotion of farm mechanization; coverage of area and yield estimation, crop diversification, promotion of fruits and vegetables apart from giving a thrust to agricultural marketing.

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