Govt depts told to cut expenses by rationalising schemes, using tech

Mumbai's state government aims to cut establishment costs and boost capital expenditure by merging schemes and leveraging technology amid fiscal challenges.

Mumbai: With an eye on increasing spending on capital expenditure and development, the cash-strapped state government has asked all departments to reduce establishment costs by using technology, weeding out unproductive schemes and merging identical schemes. A government resolution to this effect was issued by chief secretary Sujata Saunik on Friday.

CM Devendra Fadnavis with deputy CMs Eknath Shinde and Ajit Pawar (PTI)

“Fifty-eight percent of revenue receipts (of ₹5.61 lakh crore in FY2025-26) is spent on ‘committed’ expenditure including wages, pension, and establishment cost. By using technology, the departments should take steps to reduce this expenditure. The departments should try and merge duplicate schemes or scrap unproductive ones and apprise about them to the state cabinet while moving new proposals,” stated the GR, issued against the backdrop of imbalance between ‘committed’ and ‘scheme’ outlays owing to populist schemes such as Ladki Bahin Yojana.

The steps, according to the GR, are in accordance with decisions taken at the national conference of chief secretaries in December 2023, under the leadership of prime minister Narendra Modi. Durig the conference, states were asked to merge ongoing schemes and scrap unwarranted ones, so they could increase their capital expenditure.

As per the budget presented this month for financial year 2025-26, the state’s debt burden has mounted to ₹9.32 lakh crore, revenue deficit has hit ₹45,891 crore, while fiscal deficit is estimated at ₹1,36,235 crore – these figures are the highest in the state’s history.

The government spends 44.2% of revenue on salary and pension and another 11.5 % on repayment of interest on debts, while over 30% of the sanctioned government posts are vacant.

“These posts are unlikely to be filled as the GR has advised government departments to use technology to restrict the number of government employees to enhance savings, especially when the eighth pay commission is slated to be implemented from January next year,” said an official from the finance department.

According to officials in the state secretariat, chief minister Devendra Fadnavis and deputy chief minister and finance minister Ajit Pawar have ordered an increase in spending on capital expenditure.

“Spending on capital expenditure, which is currently hovering at just 13%, helps in the growth of the economy. Without strict steps to reduce spending on unproductive expenditure, generation of assets would not be possible,” said the official quoted earlier.