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Saturday, Dec 14, 2019

Stuck in debt trap, Maharashtra government goes slow on sops

mumbai Updated: Dec 04, 2019 00:30 IST

With the financial burden on the state estimated to be ₹6.79 lakh crore, the Maharashtra Vikas Aghadi (MVA) government led by Uddhav Thackeray is cautious about announcing any new scheme or implementing the assurances given in election manifestos of the three parties.

Of the ₹6.79 lakh crore, the debt burden accounts for ₹4.71 lakh crore by the end of the current fiscal and borrowings by government undertakings (MMRDA, MSRDC) account for ₹2.08 lakh crore. The Shiv Sena, Nationalist Congress Party (NCP) and Congress announced a blanket loan waiver for farmers and a meal for ₹10 to the poor in their common minimum programme.

With no signs of significant improvement in its revenue and no hopes of funding from the Centre, the MVA government will first take a hard look at the financial situation, before deciding on the implementation of the schemes and sops, which will require a huge budgetary allocation.

Chief minister Uddhav Thackeray recently said they will review all ongoing projects and prioritise their implementation. “After the review, some of the projects will be prioritised and decisions will be taken on the ones that can wait,” Thackeray said on Sunday. A senior minister said the government is expected to change its focus from infrastructural sector to social sector.

Senior minister in Thackeray government and NCP leader Jayant Patil said, “It is time to take a review of the financial situation of the state. We are reviewing important projects in the state and whether it is possible to implement a project like bullet train at a later stage.”

The debt burden in last fiscal (2018-19) was ₹4.14 lakh crore, while it was ₹3 lakh crore in 2014-15, when the Fadnavis government took over in October 2014. However, according to the officials from the finance department, the Fadnavis government’s decision of extending state guarantee to the loans raised by the public undertakings has increased contingent liabilities. “The loan includes ₹28,500 crore raised for the Mumbai-Nagpur Expressway, ₹12,000 crore for two phases of High Voltage Distribution System (HVDS) of power and ₹1.35 lakh crore for various Metro projects in Mumbai, Nagpur and Pune. The state guarantee to some of these projects is worth more than ₹45000 crore,” said an official from the finance department. “The total amount of the state guarantee given during the Congress-led government never crossed ₹7000 crore. This has led to financial indiscipline,” the official said.

The finance department had raised strong objection to the state guarantee to the Mumbai-Nagpur Expressway. It feared the cash flow from the toll collection would not match repayment of the loan and government may end up paying for the loans taken by the MSRDC. The official said the state has paid about ₹1410 crore against the state guarantee given towards the loans by Maharashtra State Central Cooperative Bank in the past five years. Another official from the department said the white paper or the status report on the state finances will be tabled during the budget session and will have figures related to the total debt, fiscal deficit, measures to bring fiscal discipline and increase investment in capital expenditure. “Then finance minister Jayant Patil brought fiscal discipline during their government in 1999-04 by framing policies and strict implementation of Fiscal Responsibility Budget Management Act. This time, too, the new government is mulling major disciplinary measures,” the official said.