Maharashtra fund crunch to hit infra, welfare plans

  • Surendra P Gangan, Hindustan Times, Mumbai
  • Updated: Dec 24, 2015 17:46 IST

It could be a major blow to big-ticket development projects in Maharashtra. Seven months into the fiscal year, the state government has earned only 48% of its revenue and is faced with rising fiscal deficit because of unplanned spending on drought relief and tax waivers.

According to figures audited up to October 2015 by the accountant general of the state, key departments such as excise, sales tax, stamp duty and registration have failed to achieve their targets. Department officials said the performance may force the government to impose spending cuts on development projects.

“About a third of the state’s revenue comes from sales tax, which has always been above target. This time, while the target was Rs43,526 crore till October, the department has collected only Rs41,427 crore. The revenue in the coming months is unlikely to improve,” said an officer from the finance department, not wishing to be named.

The state’s overall revenue is also trailing far behind its target of Rs1.98 lakh crore for the year. By October-end, total revenue was Rs95,570 crore, against an estimated collection of Rs1.16 lakh crore for the period.

Taxes on vehicles and registrations, however, have helped the government gain 98.25% of the target in the fiscal. “We expect an annual revenue of Rs5,693 crore from taxes on vehicle registration. Till October, we received Rs3,262 crore against the Rs3,320 crore target for the first seven months. Despite the slowdown in the market, vehicle sales were not affected, and this has reflected in our collection,” the official said.

The first casualty of poor earning will be development work, said an official privy to the state’s economic affairs. “The finance department has not been able to release the amount meant for development works. We have seen a cut of about 30% in what had been allocated to us in the budget. We fear this cut will continue till the end of the year. In that case, a very small amount of the Rs55,000 crore of the planned budget will be spent on development,” the official said.

In other words, the government will spend less on infrastructure projects and on welfare schemes.

Sources point to wrong estimates by a few departments for the poor revenue collection. For instance, the government expected Rs5,000 crore from the urban development department, in terms of FSI and TDR from the realty sector, but the actual collection in seven months was just Rs244 crore. The officer said besides poor receipts, poor estimates at the beginning of the year put the budget in doldrums.

Further, non-budgeted spending, such as drought relief and tax waivers, has led to expenditures rising over receipts. Apart from spending more than Rs3,500 crore on drought, the Rs4,000-crore waiver on local body tax and Rs600 crore towards tax exemption to small vehicles from the toll tax has led to a wide deficit. According to a rough estimate, the deficit may go beyond Rs12,000 crore, which will force the government to cut heavily on development expenditure.

Sudhir Mungantiwar, finance minister, said, “I don’t think the collection scenario is too bad. The receipts percentage is the same as that in October last year. No cuts have been initiated to the budget yet and we are hopeful about target achievements.”

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