Price of 7th pay panel, GST, demonetisation: Maharashtra hits highest deficit in a decade
The state budget estimates a revenue deficit of Rs15,375 crore and a fiscal deficit of Rs50,586 croremumbai Updated: Mar 10, 2018 12:57 IST
Just a year away from the 2019 elections, the BJP-led government in Maharashtra may be facing its toughest financial tests so far. On Friday, as finance minister Sudhir Mungantiwar presented the 2018-19 budget, it was clear that its farm loan waiver, 7th pay commission promise to government employees besides the GST rollout and after effects of demonetisation had come at a cost.
Going ahead in an election year, things look more difficult for the BJP-led government especially if it wants to deliver on its electoral promises like doubling farmers’ income.
The state’s fiscal numbers show just how much the farm waiver with total burden of Rs34,000 and pay commission with a total burden of Rs23,000 crore can cost it dearly.
The state exchequer has a debt of Rs4.61 lakh crore, nearly Rs60,000 crore more than last year. It has a revenue deficit of Rs15,375 crore and a fiscal deficit of Rs50,586 crore. That’s the highest deficit numbers (both revenue and fiscal) for the state since 2008-09.
Finance officials admitted that allocation of Rs20,000 crore (for loan waiver and salary hikes) besides Rs11,000 crore (approximate cost for GST compensation to local bodies) for 2018-19 had stretched the expenditure.
The budget books show that this Rs15,375 crore deficit is pegged on an expectation that the GST revenues will increase from Rs50,976 crore to Rs90,140 crore. The deficit also does not take into account the entire burden of the 7 th pay commission. So, a revision for the worse could be likely by the next fiscal.
The revenue deficit for 2017-18 pegged at Rs 4,511 crore had to be reworked this year to Rs14,843 crore with the unexpected loan waiver burden and the GST move that slashed the expected income from sales tax by nearly Rs37,428 crore. The fiscal deficit has also been revised from Rs38,892 crore to Rs 46,251 crore for 2017-18.
“There is enough space to borrow more as our debt to GSDP ratio stands at 16% within the mandated 20%. Similarly, while fiscal deficit has shot up, it is still within the norms at 1.81%. We cannot grow unless we borrow more. As long as we are borrowing to create assets, we are OK,’’ said a finance department official. Another official added that it was the government’s recently unveiled policies from start-up to textiles that laid out the real growth chart.
“The bid is to move from manufacturing to services. All our new policies are aimed toward growing the service sector,’’ said a senior official. However, in the current scenario, the state has borrowed for farm loan waiver and pay hikes.
In the face of limited resources, the finance minister has resorted to wooing communities and all sections of society besides keeping legislators happy.
From the potter community to the Marathas, sops have been offered to all. “We have announced enough big ticket projects. But, with just one year away for elections, we want people to remember us. The best way to do that is to give some personal benefits whether it is pension or more scholarships or more hostels,’’ said a BJP minister.