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Delayed GST has hit Maharashtra's Budget, but Plan B ready: State Finance Minister

Q&A with Sudhir Mungantiwar, Finance Minister, Maharashtra

Sudhir Mungantiwar, Finance Minister, Maharashtra
Sudhir Mungantiwar, Finance Minister, Maharashtra

The BJP-led government in Maharashtra faces huge challenge to reduce revenue deficit, curb revenue expenditure and increase capital expenditure. Due to the delay in GST (Goods and Services Tax) launch, the government is forced to explore innovative measures to mop up additional revenue. In an interview with Sanjay Jog, State Finance Minister Sudhir Mungantiwar, ahead of his presentation of the Budget on March 18, explains the government's strategy to revive the state’s economy.

How is the government tackling the current financial crisis?

It is true the state government faces a big challenge of high revenue expenditure and revenue deficit. The Congress-NCP government during its 15-year rule should have devoted full attention on state's overall development by adhering to fiscal prudence. It is their creation. This government has inherited the previous government's legacy and the problems. 

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The predecessors did not prepare annual plan properly, neither did it concentrate adequately to improve agriculture and thereby further strengthen the farmers. This has resulted in rising farmers suicides. This is despite agriculture’s contribution of 11.68% to the gross state domestic product. Nearly 52% of the population is dependent on it.

The government is really worried about the ongoing farmers’ suicides and is fully geared up to curb them by implementing a comprehensive plan for the betterment of agriculture and farmers.  Had the previous government taken necessary measures the problem could not have aggravated. We could have given due justice to the people of the state and especially to farmers and common man. It would have helped remove inequality.

The present establishment is thinking with an open mind and ready to slog for the upliftment of farmers, women, unemployed and poor in particular. Against this, backdrop the preparation is underway for the Annual Budget for 2016-17. You will find adequate representation given to these sections in the upcoming Budget.

Against your estimate of Rs 3,757 crore revenue deficit by the end of 2015-16, it has surged significantly. What is your take?

The rise in revenue deficit is due to various factors including the government's outgo towards the implementation of relief and rehabilitation packages for the drought and natural calamity-hit farmers. I admit that the government may miss fiscal targets set for 2015-16. 

However, I have been quite consistent on my view that farmers have first right on the state treasury. Therefore, the focus is on the revival of ailing farm sector, and, thereby (help) rescue farmers from the present crisis.

Notwithstanding the burgeoning revenue deficit, the government has not put curbs while helping farmers. 

The government already provided Rs 5,000 crore on slew of relief measures for farmers and Rs 900 crore is being approved to provide food grains to them. We pray for rain gods to bless this time and hope it will help substantially reduce the revenue deficit in the fiscal 2016-17.

Are the fulfillment of your poll promises, including abolition of local body tax and partial scrapping of toll tax responsible for present crisis?

The government took the decision in this regard considering the introduction of Goods & Services Tax (GST) from April 1, 2016. Its delay has certainly burdened the state Budget.  Further, the tax collection has dipped against the estimates largely due to present economic slump. However, the government is ready with plan B.

The government is exploring non-conventional and innovative measures instead of relying on traditional ones to mop up additional revenue.  The government will introduce measures to improve fiscal discipline on the expenditure side and also emphasise on raising more revenues and income side management. This apart, the government will pay adequate attention to improve efficiency of tax collection, contain the revenue expenditure and drastically reduce non-productive expenditure.

As far as infrastructure development is concerned, the government has already taken a number of steps in this regard and launched various projects. A committee headed by former finance secretary Vijay Kelkar in its recent report had recommended proper use of available land and the government is working in that direction.