Mumbai: Maharashtra’s public debt is expected to surge to a record Rs 10 lakh crore by 2023-24 from the present level of Rs 6.71 lakh crore, leaving limited funds for the disposal of Maha Vikas Aghadi to fulfil its slew of poll promises and complete ongoing development projects.
The state finance and planning departments have already hinted that due to constraints in revenue mobilization and volatility in GST tax collection, the government won't be able to make a budgetary allocation for meeting capital expenditure, forcing it to rely on debt.
The immediate challenge is to make available Rs 20,000 crore to compensate farmers affected by unseasonal rains and Rs 35,000 crore for loan waiver.
State's committed liabilities have been estimated at Rs 1,88,816 crore for 2019-20 comprising salary and wages Rs 1,15,241 crore, pension Rs 36,368 crore and interest payment Rs 35,205 crore. These liabilities may increase in the future and the government will have to struggle to meet them.
A senior officer from the finance department told the FPJ,'' Of the Rs 6.71 lakh crore, Rs 2 lakh crore is off budget borrowings by various state undertakings for which the government has provided a guarantee.
The experience of GST regime is not so good because of an economic slowdown and there is less collection. Due to structural issues in GST, Maharashtra and other states will be left with no support after the compensation period ends in 2022.
The collection of other taxes, including sales tax/VAT, stamps and registration, Motor Vehicle Tax and Excise Duty, may fall because of sluggish economic growth.''
He said in such circumstances the government will be compelled to raise funds through debt, as capital expenditure on the ongoing and projects in the pipeline will not be possible solely through budgetary allocation.
Another officer said hinted that the government's fiscal deficit may increase beyond the present level of 1.7%.
Furthermore, the officer cited that there are several restrictions on the transfer of central funds to states after implementing the Fourteenth Finance Commission report.
''States have been tasked to mobilise their funds to finance various schemes. This has further exerted pressure on state finances,'' he noted.