Mahayuti tables demand of ₹95,000 crore to fund populist schemes ahead of polls | Mumbai news - Hindustan Times
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Mahayuti tables demand of 95,000 crore to fund populist schemes ahead of polls

Jul 10, 2024 09:00 AM IST

Mumbai state govt. presents highest-ever supplementary demands of ₹94,889 crore to finance populist schemes ahead of upcoming Assembly polls

Mumbai: Merely a week after the 6,12,293 crore budget for 2024-25 was presented, the state government tabled the supplementary demands of 94,889 crore, making it the highest ever in history. The supplementary demands mostly aim to finance the populist schemes announced in the budget in anticipation of the upcoming Assembly polls scheduled for October this year.

Ajit Pawar, Eknath Shinde and Devendra Fadnavis of the Mahayuti. ((PIC FOR REPRESENTATION))
Ajit Pawar, Eknath Shinde and Devendra Fadnavis of the Mahayuti. ((PIC FOR REPRESENTATION))

The budgetary allocation is expected to result in a rise in the revenue deficit of 20,051 crore, leading to borrowing of more than the estimated 71,713 crore for the financial year. This has posed a risk of the state crossing the 3% limit of fiscal deficit to over 4.8% of the Gross State Domestic Product (GSDP), which is expected to be 4,267,771 crore in 2024-25. The percentage has been hovering between 2.5 to 2.7%. With the addition of the supplementary demands of 94,889 crore, the estimated fiscal deficit is expected to be 205,244 crore.

Jayant Patil, former finance minister and NCP–SP leader, said that the percentage of the fiscal deficit would reach 4.3% of the GSDP due to the whopping supplementary demands. “The revenue deficit will now have gone up to 1.14 lakh crore and the fiscal deficit would be 4.3% of the GSDP. This would reduce the rating of the state in the market, leading to difficulties in borrowing loans. This has put the state in a vicious circle,” he said.

The Mahayuti government announced a set of populist schemes providing direct cash benefits to different sections of society, including women, farmers, and youth. The combined cost of the schemes is estimated to be 96,000 crore for the state exchequer. (See box)

The major burden of that would be for the government’s flagship CM Majhi Ladaki Bahin Yojana, which is expected to cost 46,000 crore a year as over 25 million women in the state are expected to get a monthly cash benefit of 1,500. Followed by Annapurna Yojana which assures three free cylinders per year to over 5.5 lakh households. Under CM Yuva Kaushalya Yojana, the state assures a stipend of 10,000 a month to over 1 million youth. This would cost the state exchequer 6,000 crore a year.

The populist schemes were announced by the Eknath Shinde-led government in the backdrop of the dismal show of the ruling parties in the Lok Sabha elections. The ruling alliance of three parties BJP, Shinde-led Shiv Sena and Ajit Pawar-led Nationalist Congress Party (NCP) could win only 17 of 48 seats.

The 2024-25 budget was presented in the state legislature on June 28. The state government had allocated just 10,000 crore for the scheme, which led to criticism from the opposition. They claimed that the schemes were meant only for the three months ahead of the elections. The state government has, however, made budgetary allocations for the schemes for at least six months. The supplementary has the provision of 1,600 crore to buy out the Air India building, 2,750 crore for free electricity to farmers, 2,265 crore towards the margin money loan to 13 sugar mills under the control of ruling party leaders, contribution to the construction of Metro-3 line.

According to the officials from the finance department, the supplementary demands will send the state economy to the toss. “The supplementary demands tabled by finance minister Ajit Pawar is 15.49% of the budget. There are two more supplementary to be presented in the remaining financial year and they are expected to be similarly high as the schemes announced would need allocation for the remaining year. In the last few years, the size of the three supplementary tabled would hover between 17-20%, which ideally should be below 10%.

But this year’s very first supplementary demand is over 15%. This would result in the fiscal deficit crossing the permitted limit and more borrowing.

The supplementary demands have the provision of budgetary allocation of over 200 crore for the development works in the constituencies of the MLAs of the ruling alliance. The allocation has been done from the rural and urban development department’s funds.

Rupesh Keer of Samarthan, an NGO which studies state budget, said, “The question remains unanswered as to why the government did not make the allocation for the scheme in the budget presented just 10 days ago. This is going to impact the state economy very badly.”

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