State faces financial crunch

Mumbai: Though the Bharatiya Janata Party (BJP) has blamed the Congress-Nationalist Congress Party (NCP) government for financial indiscipline, it allegedly seems that the financial state of affairs of the state have worsened under the regime of the BJP-led government, as indicated in the state Accountant General (AG) figures available up to December 2017 and budget estimates of the current financial year. 

As per the records, revenue expenditure has increased by 80 per cent in the last four years, but revenue receipts have not increased. This means an increase of Rs 5.25 lakh crore of debt burden on the state in the next financial year. So, though revenue has increased in comparison with last year, the state will have to face a financial crunch and a record break fiscal and revenue deficit in the current as well as the next financial year. 

The BJP had published a white paper regarding the financial status of the state on April 11, 2015, blaming Congress-NCP government for the current financial issues. Chief minister Devendra Fadnavis had set the target for his government to increase revenue receipts, reduce revenue expenditure, spend more on capital expenditure and reduce debt burden. However, the BJP-led government failed to complete these goals. 

When the BJP-led government came in power in 2014-15, revenue expenditure was Rs 1.78 lakh crore and has now risen to Rs 3,03,810 crore. However, the revenue has only increased by 10 to 15 per cent per year, which means that the fiscal and revenue deficits are increasing every year.

Though last year, the revenue deficit was estimated to be Rs 14,000 crore, Mr Fadnavis and state finance minister Sudhir Mungantiwar managed the expenditures by raising loans and brought it down to Rs 6,000 crore. 

This year, the finance department had imposed cuts over expenses and off-budget borrowing, which doesn’t reflect in the state budget. These steps have brought the revenue deficit within the range of Rs 20,000 to Rs 25,000 crore and the fiscal deficit under the range of Rs 50,000 to Rs 60,000 crore, which is a record breaking figure. 

To arrange Rs 34,000 crore to pay off loan waivers, the state government will borrow funds, adding to the revenue expenditure. With the help of GST and other revenue sources, the government is hoping to hit the target of Rs 1,91,000 crore of tax revenue, said sources from the finance department. 

Cut on expenses reduced by 10 per cent: fin minister

The state government has reduced the financial cut on its expenses by 10 per cent. Earlier, it was 20 per cent to 30 per cent. It will increase the financial burden on the state by Rs 15,000 crore in next two months. “We are working on modalities to reduce the fiscal and revenue deficits”, said state finance minister Sudhir Mungantiwar. 

After declaring farmer loan waiver scheme of Rs 34,000 crore, the finance department had imposed a cut of 20-30 per cent for all departments for expenses in the current financial year. Medicines, health and essential things were kept outside the ambit of the cut. But there was a pressure on the government to reduce the cut, as per sources.

“Now, we have reduced the cut by 10 per cent which will increase the financial burden on the government by Rs 15,000 crore,” said Mr Mungantiwar. The cut was not applicable for District level committee works, Public heath, tribal and many social schemes. The cut will be only up to 10-20 per cent, he clarified. He refuted that claims of financial discipline. He said, “Though debt is increasing every year. It will be 16 per cent of the GDP this year because of loan waiver scheme. However, it was 17 per cent in the earlier government regime.”

He admitted that state’s financial position is difficult. He said that “We have to make provision of Rs 23,000 crore for the seventh pay commission in the next year’s budget and revenue expenditure will increase. But we are controlling the things and increasing resources.” 

“But I am sure that when we will go for election next year. The debt burden ratio with the GDP will be less than what it was in 2014, when we came in power,” Mungantiwar clarified.