Maharashtra looks at ways to cushion farm loan waiver, pay panel impact
Maharashtra government faces a double whammy as it struggles to find ways to fund farm loan waiver and seventh pay commission payout .
The decision to waive Maharashtra farmers loans will set the state government back by at least Rs30,000-Rs32,000 crore.
The government managed to end the farmers’ protests, but balancing the burden of unpaid loans, given the state’s poor finances, is not going to be easy. The government is looking to apply a cap on the benefit of the waiver up to Rs75,000 to Rs80,000 in a bid to minimise the burden to Rs30,000 crore or below.
A group of senior ministers discussing the loan waiver with the farmers, is also looking to rope in banks to stagger the loan amounts over the next five years so that the yearly burden is reduced to Rs 6,000 crore.
A senior minister, member of the group, told HT the government will give banks the guarantee in the form of bonds with future validity. He claimed many private and nationalised banks seem open to this idea.
By staggering the loan amount, the state will also be able to keep its financial parameters from going haywire. As it is with this burden, the state’s overall debt is likely to balloon from an estimated Rs 4.13 lakh crore to Rs 4.40 lakh crore and its fiscal deficit will also increase from the estimated 1.53% of the Gross Domestic Product (GDP).
The other option the government is exploring is to mobilise its non-tax sources, as suggested by the committee of senior bureaucrats.
“We have reached a saturation point in taxation on almost all fronts. The thrust will be on ensuring tax collection by plugging the leakages. Among the identified sources, there is huge potential of revenue from land monetisation. For instance, the redevelopment of a Bandra colony owned by the government may fetch us Rs10,000 crore in the near future. Similarly, leased properties in Mumbai and its suburbs have the potential to earn a huge amount on revision of the lease rates,” he said.
“We have already asked all the departments to tap the sources of revenue mobilisation. The home department has proposed hike in various fees and charges for the police permissions. The Revenue department has been looking into generating funds from the immovable properties it owns, while the urban development department is tapping chances of premium on Floor Space Index and revenue from the Transfer of Development Rights,” said an official from the finance department on the condition of anonymity.
The officials, however, admit development works and outlay for capital expenditure will be badly hit. “Although we have identified various sources, implementing them will have hurdles and also take time. This will result in the short spending on the development works in the current year. Secondly, whatever money raised is going to fall short as the government has to bear another burden of Rs21,500 crore towards the implementation of the seventh pay commission,” the officer said.
Last year, the state had to rework its revenue deficit to around Rs14,000 crore owing to poor collection from major revenue sources. A slump in the real estate sector after demonetisation announced by the Modi government last year and Supreme court’s order of banning liquor shops within 500m of the state and national highway led to the shortfall in the collection by more than Rs5,000 crore. Both the sectors are likely to underperform this year, too, making it difficult to meet their annual targets. This year’s revenue deficit estimates at Rs4,000 crore will also have to reworked by March 2018.
However, revenue minister Chandrakant Patil, who heads the high power group of ministers was confident. He said, “We don’t see any problem in raising the funds for the waiver as we have identified the resources. The government has also adopted the austerity measures and has begun to plug the leakages to ensure the revenue generation.”
