Mumbai: The Maharashtra government’s fiscal deficit is expected to be around 6-7 per cent, more than 3 per cent of the Gross State Domestic Product (GSDP), while the revenue deficit will be Rs 1 lakh crore-plus by the end of fiscal 2020-21, largely due to the substantial fall in revenue brought on by the coronavirus-induced lockdown and the economic downturn. As reported by The Free Press Journal, the state government will breach the limits under the Fiscal Responsibility and Budget Management Act, in view of the peculiar financial situation caused by the Covid-19 crisis.
At the state cabinet meeting chaired by Chief Minister Uddhav Thackeray, the finance department, headed by Deputy Chief Minister Ajit Pawar, made a comprehensive presentation on the state's delicate financial health.
A senior minister told The Free Press Journal, ‘‘The finance department has painted a bleak picture of the state’s finances and has strictly asked all departments not to come up with any ‘unnecessary’ and new proposals for expenditure in the next two months. It has clearly indicated that February and March will be tough to navigate as the government will have to cope with decreasing revenue. Departments have been asked to spend with discretion and that too, within the 33 per cent limit of planned expenditure. In May last year, the state government had already imposed a 67 per cent cut in planned expenditure, which is still in place.’’ The minister said, the government, in its 2020-21 budget, had estimated a fiscal deficit of Rs 54,618 crore -- 1.69 per cent of the Gross State Domestic Product. However, this will shoot up to 6 to 7 per cent by the end of March 31, 2021.
Further, the state government had estimated a revenue deficit of Rs 9,511 crore (.029 per cent of the GSDP), which will surge to over Rs 1 lakh crore. The revenue deficit will be more than 3 per cent.
Another minister said that the state government, during the current fiscal, had resorted to overdraft from the RBI. ‘‘ However, for February and March, the government will not need the overdraft, as it has made the necessary provision,’’ he added.
However, the government will be forced to curtail the Rs 4.5 lakh crore budget by Rs 1 lakh crore. Between April 2020 and January 2021, the state's income was only 54 per cent of its target for 2020-21 and it was 20 per cent lower than its income for the corresponding period in 2019-20.
The state had generated Rs 1.88 lakh crore in revenue till January-end. Pawar, in his annual Budget for 2020-21, had set a revenue target of Rs 3.47 lakh crore. In 2019-20, the state had collected Rs 2.37 lakh crore in revenue by the end of January 2020, which was 75 per cent of the target.
The state’s collection of major taxes is down 53.6 per cent of the target, while non-tax revenue is 47.3 per cent of the target. Further, the state had received 52 per cent of its target in the share of Central taxes by the end of January, as against 66 per cent in the corresponding period last year.