Bihar sees higher spending on new constructions

PATNA: With respect to Bihar turnaround story under CM Nitish Kumar, it is often maintained that the economy is largely construction-driven. It, incidentally, is also palpably reflected in the tale of gross capital formation (GCF) achieved in the last five fiscal years, beginning 2007-08.

It has been revealed by the recent analysis of state's budgetary transactions done by the government's own agency - Directorate of Economics and Statistics (DES) of the planning and development department. DSE joint director Jitendra Kumar Sinha said that major components of government expenditure were compensation paid to employees, new constructions, purchase of goods and services, interest payment, current and capital transfer, and repayment of loans and advances to employees.

While the expenditure incurred on new constructions and purchase of goods and services accounts for the direction the economy is taking, all the other expenditures are obligatory on the part of the government. Sinha said the expenditure on new constructions ranged from 19.5% to 24.7% during the period under consideration, and the expenditure on the purchase of goods and services ranged from 9.6% to 15.2%.

Accordingly, GCF increased from Rs 7,909.23 crore in 2007-08 to Rs 14,581.29 crore in 2011-12. It was Rs 7,741.60 crore in 2008-09, Rs 8,553.17 crore in 2009-10 and Rs 12,934.75 crore in 2010-11.

As the DSE analysis puts it, GCF "refers to the aggregate of gross additions to fixed assets, namely construction machinery and equipment. Construction activity covers all new constructions, major alteration and repairs of buildings, highways, streets, bridges, culverts, dams, drainages, wells and other irrigation sources, water and power projects, communication systems, land improvement, planting and cultivating new orchards, afforestation projects, etc"

Other than that, machinery and equipment component of GCF "comprises all types of machinery, like agriculture machinery, power generating machinery, manufacturing machinery, transport equipment, furniture and furnishings. It also includes computer hardware and software."

The GCF, however, had a "fluctuating trend throughout the period", as in the first two years it registered a marginal fall of 0.6% in 2007-08 and 2.12% in 2008-09. "But after that, it had an upward trend registering a growth as high as 51.23% in 2010-11."

The expenditure incurred on the construction of buildings was 26% of the total outlay (on construction) in 2007-08, 25% in 2008-09, 19% in 2009-10, 20% in 2010-11 and 26% in 2011-12.

Similarly, the expenditure on roads and bridges was 35% of the total outlay in 2007-08, 48% in 2008-09, 46% in 2009-10, 37% in 2010-11 and 36% in 2011-12. The expenditure on plant and machinery, including software, was 1% of the outlay both in 2007-08 and 2008-09, but increased to 2% in 2009-10, followed by 4% in 2010-11, and then fell to 3% in 2011-12.

Source: Times of India
http://timesofindia.indiatimes.com/city/patna/Bihar-sees-higher-spend-on...