Maharashtra mulls cut in development spending

Maharashtra’s financial planning is expected to go haywire in 2012-13, thanks to the proposed expenditure of a whopping Rs 4,000 crore on drought relief measures.

The government is mulling drastic spendings cut on several development schemes to ensure funds are available for providing the much-needed relief to 64 talukas that have received rainfall less than 25 to 50 per cent. Of the 355 talukas in the state, more than 120 received inadequate rainfall.

The state finance department has painted a gloomy picture of the finances at last week’s cabinet meeting, and insisted that austerity needs be practiced due to the challenging situation.

The government was bullish after the Planning Commission had cleared its annual plan size of Rs 45,000 crore for 2012-13, a rise of Rs 3,000 crore compared with 2011-12 figures. Besides, the state government has presented a surplus budget of Rs 152.49 crore. Cash flow was boosted by an increase in revenue due to rise in tax collection. The state government had expressed its intent to pump in Rs 26,000 crore for various infrastructure development projects during the year.

“A cut in development expenditure is inevitable if rain gods fail to bless us,” a senior minister, who did not want to be identified, told Business Standard. “Already the government has spent Rs 300 crore during the last four months on fodder and drinking water. Further, the government has incurred expenditure of Rs 800 crore on employment guarantee scheme. Even though the Central government has approved Rs 500 crore for the employment guarantee scheme (towards its 90 per cent share), the state is yet to receive it. The burgeoning non-planned expenditure has been a matter of serious worry.”

Moreover, the state government would have to bear an annual interest burden of over Rs 18,000 crore as its debt stock is of Rs 226,926 crore, which is 18.2 per cent of gross state domestic product.