Waiver will bleed Maha white

Mumbai: Maharashtra government’s Rs 34,022 crore loan waiver for farmers, which was declared on Saturday, will have a huge impact on the state’s finances for years to come. Admitting that there would be a dent on development projects in the state, chief minister Devendra Fadnavis said, “This is a huge amount. It is obvious that there will be pressure on finance. But we can even borrow money from financial institutions to manage the fiscal deficit.” The state treasury, which is already in the red, will further sink after this decision.

Sources in the finance ministry say the government is already mulling an option to cut down expenditure on various infrastructure projects by up to even 20 per cent.

The state government has already been struggling on the finance front. Maharashtra’s budget for 2017-18 already had a fiscal deficit of almost Rs 5,000 crore. In addition to this, the state’s revenue sources are down this year due to various reasons including demonetisation.

Compared to financial year 2015-16, Maharashtra’s revenue has fallen sharply. Estimated excise of about Rs 15,343 crore has gone down to Rs 9,442 crore. Sales tax has also gone down from an expected Rs 81,437 crore to Rs 69,253 crore. A similar drop is seen in stamp duty collection, from the expected Rs 23,547 crore to Rs 16,347 crore. In such a condition, the loan waiver of Rs 34,022 crore is certain to have a huge impact on the state's economy. Sources in the finance ministry say the government is already mulling an option to cut down expenditure on various infrastructure projects by up to even 20 per cent. Investment in industrial projects also likely to go down after this decision, the sources said.

However, Mr Fadnavis expressed confidence about managing the fallout of the loan waiver. “Though there will be burden (on the state's finances) of this amount, there are various ways to increase revenue. Our ministers and MLAs have given one-month salary (to support the loan waiver). State government officials also have given one-day salary. I am confident that our government will manage the situation,” said Mr Fadnavis.