Sharp rise in Bihar’s establishment expenditure, to borrow Rs.2000 Cr.

Though Bihar’s deputy chief minister, Sushil Kumar Modi, says that he always travels in economy class and that ostentatious Dussehra celebrations have been stopped the truth is that the establishment cost on the offices of the ministers and governor of the state has almost got doubled in the last one year.

Though the state’s internal revenue generation grew by 24.9 per cent in the last one year the salary of ministers and their allowances jumped by 76.99 per cent––from Rs 4.13 crore in 2007-08 to Rs 7.31 crore in 2008-09.

The expenditure on the ministers’ office maintenance, telephone and electricity bills increased by 137.20 per cent in this period––from Rs 86.34 lakh to Rs 2.04 crore.

The establishment expenditure incurred on Governor’s Secretariat increased by 101.87 per cent––from Rs 93.62 lakh in 2007-08 to Rs 1.89 crore in 2008-09.

According to Modi revenue growth has its own dynamics, which is independent from the rise in essential expenditure. “This is why all state governments are facing constraints,” Modi was quoted in Hindustan Times. He conceded that it is difficult to stop huge expenditure in such a situation.

While Bihar’s own revenue generation grew by 24.9 per cent in 2008-09 to Rs 6,352.47 crore the expenditure on pension for the period was Rs 2,937.67 crore. This is likely to rise further as the state government has recently hiked the pension.

Bihar to borrow Rs 2,000 crore from market to meet rising establishment expenditure

Bihar government is about to borrow Rs 2,000 crores from market to meet its rising establishment expenditure.
According to reports the time of the borrowing has been advanced by three months following fear that the interest rate may rise further.

Deputy chief minister Sushil Kumar Modi was quoted in the media as saying that the borrowing was planned for December 2009 but the sate government was forced to advance the date by the rising cost of borrowing. If the state government waits till December it would have to pay a higher rate of interest.

According to Modi, who also holds the finance portfolio, the rate of interest is increasing because the Centre and various state governments are borrowing heavily to meet their growing expenditure demand. Rise in salary and pension following the implementation of the recommendation of the Sixth Pay Commission has increased the establishment cost. Besides, there is declining trend in state’s share of central taxes.

Source: Bihartimes.com, 1st October 2009