Pattern of Public Expenditure and Expenditure Implications of Fiscal Reform Measures
4.3 Pattern of Total Expenditure in Assam
4.3.2 Pattern of Capital Expenditure
It is evident form table 4.8 that a major portion of the capital expenditure has been spent for repayment of public debt during most of the years under study. During 1990s, capital outlay constituted, on an average, 37 percent of the total capital expenditure implying that there had been huge burden of repayment of public debt during that period. An improvement in the ratio has been noticed in recent years. Capital outlay has constituted 69.95, 71.65, 70.16, 73.17 and 83.23 percent of the capital expenditure in the year 2005-06, 2006-07, 2007-08, 2008-09 and 2009-10 respectively. This is mainly due to the improvement of the fiscal situation of the state in recent years. This allows the state government to invest more on capital assets. The recent initiative by the central government to reduce the debt burden of the state governments also helped to reduce the share of repayment of public debt. The state received a debt relief under ‘Debt Consolidation and Relief Facility (DCRF) 1 Scheme’ in the year 2007-08, 2008-09 and 2009-10 (Government of Assam, 2010). All the factors contributed towards increased capital outlay of the state in those years. This ratio of capital outlay to capital expenditure of the state is also shown in figure 4.4.
Figure 4.4 Percentage of Capital Outlay to Capital Expenditure
It can be seen from figure 4.4 that the ratio of capital outlay to capital expenditure has increased during the period of study. The improvement is found to be significant particularly during the time period 2004-05 to 2009-10 when capital outlay, on an average, constituted 69.40 percent of the capital expenditure. Improvement in the ratio of capital outlay to capital expenditure in the above time period is mainly due to reduction in repayment obligations of the state government (Government of Assam, 2011). Prior to that, the average ratio of capital
outlay to capital expenditure of the state was found to be 36.39 percent during the time period 1990-91 to 2004-05.
4.3.2.1 Composition of Capital Outlay on Different Services:
The composition of capital outlay on different services provides information about the quality of capital outlay of a state (Das Gupta, 2012). The composition of capital outlay in terms of general services, social services and economic services has been provided in table 4.9.
Table 4.9
Composition of Capital Outlay of Government of Assam (` ` ` ` in lakh)
Year General services Social Services Economic Services Total Capital Outlay
1 2 3 4 5
1990-91 487 (1.97) 3058 (12.38) 21152 (85.6) 24697
1991-92 666 (2.34) 2509 (8.80) 25346 (88.87) 28521
1992-93 740 (3.12) 2248 (9.48) 20735 (87.40) 23723
1993-94 664 (2.65) 2695 (10.75) 21720 (86.61) 25079
1994-95 986 (3.56) 3330 (12.01) 23402 (84.43) 27718
1995-96 1574 (5.23) 3995 (13.29) 24501 (81.48) 30070
1996-97 484 (2) 1635 (6.75) 22100 (91.25) 24219
1997-98 607 (1.84) 2800 (8.50) 29524 (89.65) 32931
1998-99 340 (0.93) 4643 (12.76) 31397 (86.30) 36380
1999-00 1054 (2.18) 5152 (10.68) 42041 (87.14) 48247
2000-01 787 (1.40) 3469 (6.18) 51892 (92.42) 56148
2001-02 980 (1.91) 3433 (6.69) 46902 (91.0) 51315
2002-03 1125 (2.23) 2195 (4.34) 47233 (93.43) 50553
2003-04 1762 (2.83) 3947 (6.35) 56490 (90.82) 62199
2004-05 2320 (1.06) 4740 (2.17) 210993 (96.76) 218052
2005-06 1041 (0.96) 4507 (4.15) 102984 (94.89) 108532
2006-07 2317 (1.59) 15514 (10.68) 127469 (87.73) 145300
2007-08 4328 (2.56) 26561 (15.73) 137922 (81.70) 168811
2008-09 3564 (1.50) 49438 (20.83) 184299 (77.64) 237301
2009-10 7186 (2.73) 45084 (17.15) 210665 (80.12) 262935
CAGR (1990-91 to 1999-00) 8.96 5.97 7.93 7.72
CAGR (2000-01 to2009-10) 27.86 32.97 16.85 18.71
CAGR (1990-91 to 2009-10) 15.22 15.21 12.86 13.26
Figures in parentheses represent percentage of these variables to total
Source: Directorate of Economics and Statistics, Government of Assam, various issues
From table 4.9, it is evident that expenditure on economic services constitutes the major portion of total capital outlay during the study period. The compound growth rate of this component of expenditure is found to be 12.86 percent during the period 1990-91 to 2009-10.
For the same time period, the compound growth rate of general and social services is found to be 15.22 percent and 15.21 percent respectively implying that the growth rate of these components of expenditure is comparatively higher than the growth rate of capital expenditure on economic services. As economic services constitutes major portion of the capital outlay, it is necessary to analyse the pattern and composition of expenditure on economic services. The composition and pattern of capital expenditure on economic services has been provided in table 4.10.
From table 4.10, increase in the capital outlay on economic services has been noticed during the time period from 2000-01 to 2009-10 compared to the previous decade. The state registered a compound growth of 16.85 percent on capital expenditure on economic services during the time period 2000-01 to 2009-10 compared to 7.93 percent in the previous decade.
Water and power development constitute the major portion of the capital outlay of the state during the period of study. It contributed, on an average, 42 percent of the total capital expenditure on economic services during the study period. Expenditure on transport and communication constituted, on an average, 35 percent of the total capital outlay on economic services for the study period. Capital outlay on industry and minerals is found to be comparatively low for the entire time period taken for the study. Although it registered a high growth rate in the first decade of the present century compared to the previous decade, it shared only 4.81 percent of the capital expenditure on economic services during the period of study. But the share of agriculture and allied activities has been increasing during the period under consideration indicating that greater importance is assigned to this sector.
Table 4.10
Capital Outlay on Economic Services of the State (` ` ` ` in lakh))))
Year Agriculture
and Allied Activities
Industry and Minerals
Water and Power Development
Transport and Communication
General Economic
Services
Total
1 2 3 4 5 6 7
1990-91 2003 (9.47) 2061 (9.74) 10216 (48.30) 6789 (32.10) 83 (0.39) 21152 1991-92 2494 (9.84) 2285 (9.02) 12515 (49.38) 7925 (31.27) 127 (0.50) 25346 1992-93 1355 (6.53) 888 (4.28) 9701 (46.79) 8733 (42.12) 58 (0.28) 20735 1993-94 2229 (10.26) 1807 (8.32) 9954 (45.83) 7584 (34.92) 146 (0.67) 21720 1994-95 2584 (11.04) 2019 (8.63) 10594 (45.27) 8018 (34.26) 187 (0.80) 23402 1995-96 1715 (7) 1984 (8.10) 9736 (39.74) 10994 (44.87) 72 (0.29) 24501 1996-97 147 (0.67) 2679 (12.12) 1085(49.13) 8359 (37.82) 57 (0.26) 22100 1997-98 1198 (4.06) 3174 (10.75) 15883 (53.80) 9217 (31.22) 52 (0.18) 29524 1998-99 1859 (5.92) 2546 (8.11) 13165 (41.93) 13705 (43.65) 122 (0.39) 31397 1999-00 4608 (10.96) 297 (0.71) 18668 (44.40) 18276 (43.47) 192 (0.46) 42041 2000-01 13514(26.04) 931 (1.80) 15002 (28.91) 22222 (42.82) 223 (0.43) 51892 2001-02 9626 (20.52) 161 (0.34) 17964 (38.30) 18739 (39.95) 412 (0.88) 46902 2002-03 10824 (22.92) 149 (0.32) 17611 (37.29) 18613 (39.41) 36 (0.08) 47233 2003-04 21397 (37.88) 81 (0.14) 16345 (28.93) 18559 (32.85) 108 (0.19) 56490 2004-05 32372 (15.34) 200 (0.09) 148408 (70.34) 29929 (14.18) 83 (0.04) 210993 2005-06 27545 (26.75) 197 (0.19) 31735 (30.82) 43378 (42.12) 129 (0.13) 102984 2006-07 40158 (31.50) 9989 (7.84) 40524 (31.79) 35732 (28.03) 1066 (0.84) 127469 2007-08 22905 (16.61) 1760 (1.28) 61554 (44.63) 51662 (37.46) 41 (0.03) 137922 2008-09 46062 (24.99) 1544 (0.84) 83601 (45.36) 52872 (28.69) 261 (0.14) 184299 2009-10 41208 (19.56) 10595 (5.03) 93816 (44.53) 63187 (29.99) 1859 (0.88) 210665
CAGR
(1990-91 to 1999-00) 9.70 -19.37 6.93 11.63 9.77 7.93
CAGR
(2000-01 to2009-10) 13.19 31.01 22.59 12.31 26.63 16.85
CAGR
(1990-91 to2009-10) 17.25 9.00 12.38 12.46 17.78 12.86
Figures in parentheses represent percentage of these variables to total
Source: Directorate of Economics and Statistics, Government of Assam, various issues
The above discussion gives an idea about the pattern and growth of expenditure of the state during the period of study. While the growth in public expenditure is important, the quality of expenditure is of more significance from the point of view of overall economic development. As such, an attempt has been made in the following section to examine the quality of public expenditure in the state.