Devendra Fadnavis asks for ₹81,000 crore even as finance commission says Maharashtra not spending enough on development | Mumbai news - Hindustan Times
close_game
close_game

Devendra Fadnavis asks for 81,000 crore even as finance commission says Maharashtra not spending enough on development

Hindustan Times | By, Mumbai
Sep 20, 2018 09:30 AM IST

The commission pointed out the growth rate of state’s revenue had fallen to 11.05% in 2014-17 from 17.69% from 2009-13

Even as the 15th Finance Commission of India expressed concern over the state’s capital expenditure against the total annual spending, the government on Wednesday demanded more than 81,000 crore as special grant from the commission, including 50,000 crore for Mumbai, 25,000 crore for Vidarbha and Marathwada and 5,000 crore for thematic schemes. Besides, the state has also asked to increase devolution of funds to 50% from 42%.

CM Devendra Fadnavis with the members of the 15th Finance Commission on Wednesday.(HT Photo)
CM Devendra Fadnavis with the members of the 15th Finance Commission on Wednesday.(HT Photo)

Capital expenditure generally means the state’s spending on development works. Currently, the capital expenditure of the state is just 1% of the gross domestic product (GDP). The commission has suggested it be increased by borrowing more money to create more capital assets.

Hindustan Times - your fastest source for breaking news! Read now.

“In the meeting with the commission on Wednesday, chief minister Devendra Fadnavis said the state can achieve one-trillion-dollar economy by 2024-25, only if it gets enough financial support from Centre and going by the current method, it will reach only the 50% mark,” said a senior official from state finance department, privy to the development.

“Maharashtra must be credited as one of those states where the fiscal deficit is well within the 3% target laid down by Fiscal Responsibility and Budgetary Management Act (FRBM). In relation to the debt to GDP, Maharashtra is well within the fiscal parameters. It means, it has fiscal space left for capital expenditure, which we encourage the state to look for, bringing a balancing between capital and revenue expenditure,” said NK Singh, chairman of the commission.

“We were promised that if we look at the capital expenditure made by many parastatals (government undertakings), the capital expenditure figures are increasing. The performance of the state government on key macro targets of fiscal deficit, primary deficit and debt to GDP is very laudable one,” he said.

UPS Madan, additional chief secretary, finance department, said, “The state has consciously kept capital expenditure of the government undertakings separate from the state’s budget by adopting a system where they will invest in urban infrastructure and state’s capital expenditure will be used for the rest of the state. By adding capital expenditure of both, it will reach up to 2% of GDP.”

The fresh observations of the commission have come days after it said the state growth rate and revenue receipts are falling, which created a flutter. The commission pointed out the growth rate of state’s revenue had fallen to 11.05% in 2014-17 from 17.69% from 2009-13. It also said the state’s tax revenue declined to 8.16% in 2014-17 from 19.44% in 2009-13.

“The finance commission doesn’t manipulate the figures. The figures in the press release came from a recent report of the Account General of Maharashtra. The financial picture is somewhat misleading, as the selection done by the Account General of Maharashtra for the fiscal years is sporadic. If you compare the revenue situation of Maharashtra with other states, it is much better,” Singh said.

The finance commission chairman said the state’s demand for special grants for Mumbai will be considered and it will be reflected in its final recommendations.

In its 70-page memorandum, the state said the states should also be given proportionate share of the additional funds generated through cesses and surcharges, spectrum, sales, licenses fees, disinvestment etc.

“For devolution of taxes among states, we hold a strong view that the finance commission should give due weightage to both equity and efficiency parameters. In the past, disproportionate emphasis has been given to the equity parameters at the cost of other relevant parameters that rewards efficiency. This now wants correction,” said the memorandum.

The state has suggested a new formula for giving weightage for sharing devolution of funds. It has sought 35% weightage on population (2011 census), 15% on area, 15% on income distance, 10% on urbanisation, 7.5% on fiscal efficiency, 2.5% on tree cover and the rest on deprivation of families in rural areas, which should be based on socio-economic caste census report.

SHARE THIS ARTICLE ON
Share this article
  • ABOUT THE AUTHOR
    author-default-90x90

    Faisal is with the political team and covers state administration and state politics. He also covers NCP.

SHARE
Story Saved
Live Score
OPEN APP
Saved Articles
Following
My Reads
Sign out
New Delhi 0C
Tuesday, March 19, 2024
Start 14 Days Free Trial Subscribe Now
Follow Us On