State Faces Rs 1000cr Resource Gap

A top government source said: "Crisis is staring the Maharashtra government in the face. The government would start feeling the pinch by December-end. There will be no money in the coffers after mid-January to support the plan size."

Another informed source said that the Shiv Sena-BJP rulers are seized of the crisis but are hoping for a miracle.

The looming crisis is the result of an overestimated annual plan size of Rs 8284 crore. The situation is that the resources, including balance on current revenue (BCR), open market borrowings, central support, various loans from LIC and Nabard, would fall short by over Rs 1,000 crore.

 

"The plan size has no relation to the resources. It was barely Rs 4,400 crore in 1994-95, went up to Rs 5,500 crore in 1995-96 and was ridiculously pegged at Rs 8284 crore this year," the source said.

She added: "We have a ways and means advance facility of Rs 300 crore but how long would that last? Since V P Singh's days as finance minister in 1988, RBI is very strict about repayment of overdraft within ten days and dishonouring of cheques. This would lead to cheques to government staff bouncing. Which in essence means that we would have to run to Delhi to bail us out, a la Chandrababu Naidu." She further said that according to government's estimates tax collection in the year cannot meet the current expenditure.

Sources said the situation can be retrieved by only two imponderables: one, a drastic cut in the plan size to bring it around to a more realistic Rs 7,200 crore and, two, a sudden buoyancy in the taxes through a spurt in economic activity.

Both Sena and BJP sources said that the ruling parties in the government are not in the favour of a cut in the plan size, what with the Zilla Parishad elections slated for January-February. "The political will is lacking to take such a step," said a source. It is learnt that Planning Commission deputy chairman Madhu Dandavate had warned the state against the overambitious plan size but to no avail.

Any decision to prune the plan size has to be taken within a fortnight. With the open season in full swing, the demands from the various government departments would start for their budgetary provisions. The supplementary demands would be activated during the next 15 days and all released (money outflow) would have taken place, sources said.

The second probable saviour for the government -- improved economic activity -- is extremely unlikely. Economic pundits have predicted a dip in the growth rate from 7 per cent in 1995-96 to 6.5 per cent the current financial year. So the "buoyancy in the taxes" theory is ruled out.

Maharashtra did go for an overdraft of Rs 400-odd crore in April this year but it was a mere technical overdraft that was repaid within four days. "Mahar-ashtra has never been in a crisis before. It has always been considered efficient because revenue receipts exceed revenue expenditure. A continuous positive balance on current revenue has indicated the good solvency of the state," senior sources said.