Maharashtra: Tough Days Ahead for Govt, Financial Crisis Looms

Maharashtra is one of the rich states in India, with the capital, Mumbai, considered as the financial capital of the country. Despite this, the news in the state’s financial front is not positive. After assuming office as chief minister, Uddhav Thackeray had asked all the major departments under the state government to make a presentation. In this, the state’s Finance Department compiled all facts to present before him. This presentation, a copy of which is in possession of NewsClick, clearly shows that the state’s treasury is empty.

The state’s gross income was Rs 20.88 lakh crore in 2018-19, with an average growth at 7.5%. However, it is a steep fall from 9.2% average growth in 2016-17. The state’s treasury witnessed a slowdown following demonetisation. In 2019-20, the state’s expected revenue income is Rs 2,02,122 crore, out of which, Rs 1,02,760 crore is expected from Goods and Service Tax (GST). However, fall of all estimations of GST on the national level has already been proved. The case is similar at the state level too. Therefore, the expected revenue from GST in 2019-2020 will also go down, as per officers in the finance ministry.

But on the other hand, state’s revenue expenses are increasing year after year. The presentation of finance department clearly mentions that in the last one decade, the revenue expenditure has been increasing which is worrisome. In 2011-12, the state’s revenue expenditure was 85% of the overall expenditure whereas, capital expenditure was 15%. But at the end of this decade, revenue expenditure has increased to 89% whereas, capital expenditure has gone down to just 11%. The presentation also clearly mentioned that due to the 7th pay commission, the revenue expenses will increase further.

Also read: Maharashtra Aims at 7.5% Growth But Key Sectors, Led by Agriculture, Face Decline

As far as loans are concerned, the presentation says that the state has a loan of Rs 6.71 lakh crore in total. In 2011-12, the state’s loan stood at Rs 2,25,976 crore. When the earlier Congress-NCP government was defeated, the state had loans of Rs 2,94,261 crore. But at the end of just five years of the BJP-led government, the state’s loan rose to Rs 4,71,642 crore. Also, various state undertakings have borrowed moeny for different projects, which stands at around Rs 2 lakh crore. The state government is the guarantor for these loans. So, the total amount of loan goes up to Rs 6.71 crore.

After the presentation, a senior officer in the state bureaucracy informed CM Thackeray that the strict financial discipline has to be followed by government to sail through the current financial crisis. “There is a slowdown in the country. The state’s economy is highly connected to global trends. Industrial output is also going down in the state. So, keeping all these things in mind, the state government will have to plan well,” the officer reportedly told CM Thackeray.

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Cabinet minister and Nationalist Congress Party (NCP) leader Jayant Patil, who has presented the state’s budget for a record nine times, said that the earlier government has created a mess on the financial front. “I have not gone deeply into the papers. But the situation is not well. The Fadnavis government has failed the state’s financial discipline and the huge borrowings will have a long-term impact. The state will have to search for more sources of income to push for growth,” he said. NCP is likely to get finance portfolio.

In view of the serious situation at hand, Thackeray has written a letter to Finance Minister Nirmala Sitharaman asking for dues that have been pending with the union government for long. In this letter, Thackeray has demanded a total amount Rs 15,568 crore pending from the central government. He has elaborated the details of dues saying that Rs 6,946 crore are from tax devaluation and Rs 8,611 crore are from GST refund. He has also said that the dues as well as shortfall in tax devolution has affected the state finances badly.