Huge debt looms, state set to tighten its purse strings
State finance and planning minister Sudhir Mungantiwar on Monday said the government was seriously considering issuing a white paper, or a status report, on the state’s finances, owing to the huge debt of Rs3 lakh crore.india Updated: Nov 04, 2014 01:26 IST
State finance and planning minister Sudhir Mungantiwar on Monday said the government was seriously considering issuing a white paper, or a status report, on the state’s finances, owing to the huge debt of Rs3 lakh crore.
The last white paper on finances was issued in the state in 1999, a few months after the Shiv Sena-BJP government had made way for the Congress-NCP regime. At the time, the state had a debt of Rs44,000 crore, a loan taken to fund new flyovers in Mumbai and for the Mumbai-Pune Expressway. A white paper is a document stating the state’s financial position and what the government intends to do for improving the situation.
In the last 15 years, the debt has ballooned to more than six times — an estimated Rs3 lakh crore by March 2015. “We are thinking of issuing a white paper on state finances. The state has a debt of Rs3 lakh crore. In the past five years alone, they [earlier government] raised Rs98,000 crore as loan. How much of it has gone to create assets? Where has this money gone and how are we managing our loans and interest payments? All this needs a thorough review,” Mungantiwar told HT.
The BJP government faces a resource crunch, with sops promised by the earlier government likely to lead to a further loan of Rs52,000 crore.
The state’s revenue deficit stands at Rs26,000 crore, and the salary and pensions bill is estimated to be Rs83,590 crore for 2014-15.
Finance officials admitted the real trouble for the government would come in 2017-19, when the debt of around Rs35,000 crore will have to be repaid.
“I plan on holding meetings with every department in the coming days, to review expenditure plans. Only those schemes will be allowed where I can see the end result will lead to creation of an asset, physical infrastructure, or will benefit a large populance. We can’t reduce the wage bill, so the least we can do is make optimal use of every rupee spent,” said Mungantiwar.
In the presentation made before the cabinet on Saturday, the finance department had argued for a cut back on election sops, including the Rs8,000-crore power subsidy to farmers, besides on transport, free meds and civil supplies.
The finance minister indicated that election sops announced by the Congress-NCP government, just before the assembly polls, could face the boot. “Expenses that are currently just on paper will be reviewed. Social expenses are fine, but they have to be maintained at a certain level in the budget,” he said.
In Nagpur, chief minister Devendra Fadnavis also underlined the likelihood of such an exercise, but said it would be in the nature of a status report instead of a white paper. “This document will be more in the nature of a status report than a white paper, which while criticising the earlier government may also put the state in a bad light. The report will look at the current state of the economy and the future path to be adopted,” he said.
The Congress-NCP government had defended the debt, saying it was well within the parameters set down by the Centre – 17.5 % of the state’s total income.
Fadnavis, however, said: “There is nothing wrong in incurring loans to run the state. But, it should not go out of control. You have to ensure a good return on investment. The spending should add to the state’s GDP. Otherwise mindless borrowing and bad quality of spending could push the state into vortex of bankruptcy.”