CAG hails Maharashtra govt’s initiatives to contain revenue deficit at 2.69% against 4% target in 2020-21

CAG hails Maharashtra govt’s initiatives to contain revenue deficit at 2.69% against 4% target in 2020-21

During 2020-21, the fiscal liability (total outstanding to debt) to gross state domestic product (GSDP) ratio at 20.15% was higher than the targets prescribed in the Maharashtra Fiscal Responsibility and Budgetary Management Act, 2005.

Sanjay JogUpdated: Thursday, August 25, 2022, 11:39 PM IST
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Despite Maharashtra’s economy being hit by the Covid-19 pandemic, former state finance minister Ajit Pawar managed to contain the fiscal deficit at 2.69% against the target of 4%. The earlier target of 3% was revised owing to the pandemic, but Pawar managed to keep the deficit even lower. This revelation has been made by the Comptroller and Auditor General of India (CAG) in its latest report.

However, the revenue deficit of Rs 17,116 crore in 2019-20 rose to Rs 41,141.85 crore in 2020-21, when even the fiscal liability (total outstanding to debt) to gross state domestic product (GSDP) ratio at 20.15% was higher than the targets prescribed in the Maharashtra Fiscal Responsibility and Budgetary Management Act, 2005.

In the five years, 2016-21, the state could achieve revenue surplus only in Rs 2017-18 and 2018-19, when Devendra Fadnavis’s government was at the helm of affairs.

The CAG also rapped Maharashtra for not transferring the cumulative balance of Rs 10,642.26 crore towards the National Pension System to the National Securities Depository Limited (NSDL), which is the designated authority. “Uncollected, unmatched and non-transferred amounts, with accrued interest, represent outstanding liabilities of the state government under the National Pension System,” said the CAG and added that the state government only transferred Rs 3,236.89 crore to the NSDL as on March 31, 2021.

Regarding the extraordinary situation of the pandemic and the consequent lockdowns affecting the economic activities in the state, the CAG said it resulted in negative Gross State Domestic Product (GSDP) growth of 5.57% in 2020-21. Agriculture and allied activities were the only silver linings as they grew by 11.7%, but the industry reported minus 11.3% growth and a negative of 9% for the service sector. Further, during 2016-17 and 2020-21, while there was a dip in the relative share of industry to GSDP, there was a marginal increase in the relative share of agriculture and service sector.

The outstanding debt (fiscal liabilities) of the state government increased from Rs 3,95,858 crore in 2016-17 to Rs 5,48,176 crore at the end of 2020-21. The outstanding debt grew by 12.43% owing to an increase in the outstanding internal debt by Rs 46,903 crore and loans from the Government of India by Rs 14,025.29 crore, which included Rs 11,977 crore in lieu of GST compensation.

As per the CAG, the state’s tax revenue, which is the major contributor of revenue receipt, declined steeply by 13.07%. Meanwhile, capital outlay decreased by 18.48% and market borrowings increased drastically by 51.59% in 2020-21. The state availed the additional borrowing of 2% of GSDP in 2020-21. However, due to reduced expenditure, the state could contain its fiscal deficit to GSDP ratio at 2.69%.

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