Maha cuts its development spending by 67% this year

The state government on Monday announced a 67% cut in its spending for developmental works this fiscal, in view of the estimated revenue losses of more than ₹40,000

The state government on Monday announced a 67% cut in its spending for developmental works this fiscal, in view of the estimated revenue losses of more than ₹40,000 crore in March and April 2020 owing to the Covid-19 outbreak.

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The state, expecting the cumulative losses to be more than ₹50,000 crore in the current fiscal, has also decided to not take up new development schemes and scrap or defer the schemes that can be put on hold.

Among other measures, the government has also decided to stop recruitment for government jobs, meaning that recruitment underway for 35,000 posts is unlikely now.

Recruitments in the public health and medical education departments, however, have been excluded from the diktat. Around 1.90 lakh posts (of around 17 lakh sanctioned posts) in the state government are vacant.

Chief secretary Ajoy Mehta issued the government resolution on Monday, announcing the cut in expenditure on development schemes and curbs on recruitments. “Only 33% of the outlay for the schemes will be released in the ongoing financial year. The departments should take a review of the ongoing schemes and take call on their deferment or the cancellation. This will be applicable even to those schemes decided by the state cabinet before March 31, 2020. No new schemes be proposed,” the GR stated.

According to officials from the finance department, only 33% of the total outlay for the scheme expenditure of around ₹1.15 lakh crore will be released within the financial year. “Yes, unfortunately this means we are spending ₹70,000 crore less on social and development schemes. The amount is roughly equivalent to the drop we expect in the revenue receipt in the financial year,” the official said.

The decision, however, will not be applicable to the Covid-19 pandemic -related expenditure by departments such as public health, medical education, relief and rehabilitation, and food and civil supplies. The estimated expenditure on battling Covid-19 by these departments is more than ₹800 crore, including ₹450 crore by the public health department. The departments have also been directed to not undertake any new construction (of roads, bridges or buildings) or even give them technical approval. The departments with corpus lying unused in banks have been warned to give the deposit back to the government or face inquiry.

The state government has seen a revenue losses of over ₹40,000 crore in March and April owing to the lockdown, which has resulted in industrial and commercial activities coming to a complete halt. The state government expects a similar trend of a drop in revenue for the next two-three months. It has already demanded financial assistance of ₹50,000 crore from the Centre and the permission to raise greater amount of loans.

Meanwhile, the state government has sustained estimated losses of ₹2,800 crore expected from excise duty and sales tax on liquor in the oast 40 days of the lockdown. “This will affect our annual revenue target of ₹19,225 crore. We expect an unusual surge in liquor consumption for the next few days after liquor shops have opened today, before it stabilises to its average sale,” said Kantilal Umap, excise commissioner.

The state government has said that liquor shops will begin to operate in the next couple of days after preparations in terms of logistics and stocks. “Although we have issued an order to keep liquor shops open in all colour-coded zones, except containment zones, district collectors have all rights to decide otherwise. Nagpur and Aurangabad collectors enquired with the government if they could continue to keep liquor shops shut,” said Bhushan Gagarani, principal secretary, Maharashtra government.