Maharashtra govt blames Congress-NCP rule for fiscal mess

Says previous government responsible for revenue imbalance, loss of credibility of annual budget and rise in geographical disparity

The Bharatiya Janata Party (BJP)-led government in Maharashtra has laid the blame for rise in revenue imbalance and inadequate capital expenditure at the doors of its predecessors Congress and Nationalist Congress Party (NCP).  The Congress-NCP alliance ruled the state from 1999 to 2014. The BJP has also blamed it for wrong planning.

For 2014-15, the revenue deficit is projected at Rs 13,883 crore. The government has also raised a total of Rs 1.93-lakh crore as debt but spent Rs 18,304 crore, 9.5 per cent of the revenue expenditure during the last 10 years. The much-debated white paper on the state’s economy was presented on Friday by the state Finance Minister Deepak Kesarkar in the legislature. It expressed concern that capital expenditure has decreased to 11.1 per cent in 2014-15 from 17.2 per cent in the Budget.

This adversely impacted the asset creation needed to boost the economic growth.  The government has claimed that its predecessor repeatedly presented supplementary demands, after the presentation of annual Budget, to make up for the revenue gap. This was because of a lack of adequate planning and also absence of control over non-plan expenditure.

The difference between the state’s annual plan and actual expenditure has been 14 per cent to 21 per cent. This has affected the credibility of the Budget and also resulted in incorrect projections.

The government said the increase in expenses on salary and wages was also a cause of concern. It has surged to a record Rs 24,934 crore from Rs 13,024 crore in last five years — an annual rise of 13.9 per cent. Implementation of the recommendations of the Sixth Pay Commission, revision in dearness allowance and increase in posts. The rise in expenses under these heads has been significant in the departments of home, law and judiciary, revenue, forests, education, food and drugs.

The government has made a strong case for the application of business process re-engineering and modern technology to reduce these expenses. It has also proposed to set up an expert panel for the proper evaluation of various works. Also, the disbursement of government assistance in the form of grants and subsidies would we linked to Aadhar to achieve revenue balance.  

On a brighter note, the accumulated public debt has reduced from 266.1 per cent to 167.4 per cent, even while public debt has risen from Rs 1.09-lakh crore to Rs 3.03-lakh crore in the last 10 years. The fiscal deficit has remained within the 3 per cent limit of the gross state domestic product (GSDP) except for 2009-10.

Interest payment is 13.4 per cent of the state revenue, with a rate of interest on pubic debt being eight per cent.

Giving credit where due, the government has praised it predecessor for a 16 per cent rise in the revenue.

The government, however, took its predecessor to task over low rate of agriculture growth, including the low per-hectare output compared to the national average and the low irrigation. It claimed this was the prime reason for geographical disparity, and the divide between urban and rural areas as well as between agriculture and industries.

The government has projected that it will need Rs 70,749.9 crore to completer 452 irrigation projects.