Maharashtra government expects revenue loss of Rs1.12L-crore, work on devpt projects hit

The outstanding dues with the Centre towards the compensation for losses while implementing the Goods and Services Tax (GST) regime and devolution of taxes is about ₹26,000 crore, making it difficult for the state to release funds on development works.

Owing to the Covid-19 pandemic and the ensuing lockdown that crippled Maharashtra’s economy, the state government is staring at a deficit of more than ₹1.12 lakh crore for financial year 2020-21. This has affected development projects and social schemes largely with all the departments being instructed to spend cautiously in the remaining two months of the fiscal year.

(HT FILE)

The state finance department on Wednesday made a presentation before the state cabinet, informing them that against the estimated revenue of ₹3.34 lakh crore, the cumulative collection until the end of January was around ₹1.80 lakh crore and around ₹50,000 crore more is expected in the remaining two months, so the deficit is expected to be about ₹1.12 lakh crore. The outstanding dues with the Centre towards the compensation for losses while implementing the Goods and Services Tax (GST) regime and devolution of taxes is about ₹26,000 crore, making it difficult for the state to release funds on development works.

“All sectors, especially industries and services, were badly hit due to the lockdown imposed from March last year. The GST collection is expected to see a deficit of around ₹35,000 crore in FY 20-21, so is the fall in the collection in other heads, including stamp duty, vehicles taxes and excise. Despite it, the state government released cent percent funds allocated for district planning and developments and local area development funds allocated to the legislators. Barring a few departments such as home, public health, medical education, other departments will have to compromise on their allocations for the remaining period of the FY,” the presentation emphasised.

Though the revenue receipts from the taxes have improved over the last few months and have crossed over ₹20,000 crore a month, which had dropped to about ₹12,000 crore in first two months of the FY 20-21. State spends about ₹12,000 crore on the fixed monthly expenditure on salary and pension of the government employees. “The state government has already borrowed ₹70,000 crore and ended up spending ₹25,000 crore for the relief and rehabilitation of farmers and people hit by unseasonal rain, Nisarg cyclone, among others,” the presentation stated.

“The state is tapping newer ways of resource mobilisation and is expected to levy toll on heavy vehicles and the sand transported to the state from other states. This cascading effect of the economic crisis is expected to remain for at least first few months of the next financial year, which has made mobilisation of taxes more important,” said a minister after the meeting.

Neeraj Hatekar, an economist with Mumbai University, said, “The deficit would be because of the revenue shortfall and drop in GST collection. It is a fallout of the economic crisis because of the pandemic. The government will however have to raise funds by borrowing instead of cutting down on the development funds.”