NEW DELHI: Rejecting criticism that the massive Rs 1.25 lakh crore Bihar package is a rehash of existing schemes, the Centre today said it involves major additional outlays beyond the normal flow of central funds in which every scheme is a new work.
Necessary provisions for the schemes will be included in the budgets in the coming years, highly placed sources said, contradicting claims that no source of funding has been identified nor budgetary provisions made in the package announced by Prime Minister Narendra Modi.
The sources also allayed fears that the huge package would lead to fiscal deficit, saying the proposed expenditure will be in the nature of capital expenditure that will improve productivity and produce high rate of economic return.
“The commitment in the package is to launch and finish the non-started works,” the sources said.
The central government asserted that the package is “a very specific and detailed list of works and not a vague collection of financial outlays” with each and every element identified and costed.
About the timelines, the sources said the time period for the package varies from item to item. Some may be implemented in a shorter period of time of 1-2 years while others may take longer.
“The commitment in the package is to provide funding for completion of the project in the stipulated period. The tax incentives for employment generation have already come into effect. It is for the state government to attract manufacturers and create jobs,” they said.
The expenditure in the package will be partly from the central budget and partly from public sector undertakings, the sources said. . About concerns that the economic revival package may lead to fiscal deficit, sources said the expenditure will be met well within the fiscal deficit targets to which the central government has committed itself.
“The Bihar package will not lead to any increase in overall fiscal deficit and will be managed within the target.
It may also be noted that the government has already made large increases in budget provisions for roads and railways this year,” the sources said.
With regard to the charge that the package covers existing schemes, they said every item in it is either new work or a work or a scheme which has not started so far.
“All ongoing works have been excluded from the core package of Rs 1,25,000 crore,” the sources said.
Citing the example of highways, they said out of the total of Rs 54,713 crore, Rs 44,722 crore comprise newly-sanctioned projects which are in the pipeline, and Rs 9991 crore consist of projects which were approved earlier but have not yet commenced.
The sources noted that Bihar has been brought into a special category for income tax purposes through a notification on August 17 whereby those companies that invest in plant and machinery in backward areas of Bihar will get substantial corporate tax benefits in the form of higher depreciation and higher investment allowance.
This will stimulate employment generation in Bihar, they said.
On demands for grant of ‘special category’ status to Bihar, the sources said “They are not clear what they mean by it. This package gives much more financial investment in the state and this gives a ‘special status’ to the people of Bihar.”
The sources said under the previous government, the request for granting ‘special category’ status to Bihar was considered by an Inter-Ministerial Group which submitted its report on March 30, 2012. The IMG came to the conclusion that based on existing criteria the case for special category status for Bihar was not made out.
“Since then, the 14th Finance Commission appointed by the previous government has not distinguished between special category and other states. Hence, the concept has lost its significance,” they said. -PTI
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