Maha State borrowings rose by record 164%; Cabinet to discuss options to mop up additional resources

Borrowings by the Maha Vikas Aghadi government during April–October 2020 registered a record 164 per cent increase at Rs 59,500 crore, against the Rs 22,500 crore in the corresponding period last year. The cost of borrowing for the state government rose this week, reversing the decline of the preceding two weeks. The weighted average cost of borrowing for state government dated securities auctioned was 6.45 per cent, an increase of 19 bps from a week ago.

The government is expected to borrow a total of Rs 1,40,000 crore by the end of fiscal 2020-21. It has indicated that the borrowings will be below 25 per cent of the State Gross Domestic Product allowed by the 13th Finance Commission.

For the same period, there has been a revenue shortfall of over Rs 46,106.16 crore. Against revenue collection of Rs 1,37, 557.34 crore (April-September 2019), the government has mopped up Rs 91,451.18 crore. The state government has estimated a revenue collection of Rs 3,47,456.89 crore for 2020-21.

The state cabinet will review the precarious state of its finances at its meeting on Thursday and discuss various options other than borrowings, to increase revenue collection. A senior minister told The Free Press Journal that the state government is exploring multiple options, including an increase in fees charged at the time of renewal of excise licences, revision in toll rates and restructuring of high-interest loans.

The state government has been pursuing with the Centre the issue of early release of long-pending GST dues of Rs 38,000 crore. Chief Minister Uddhav Thackeray has said the Centre should clear the dues so that the state can use the funds for coronavirus containment measures and also on a slew of development projects. At the Shiv Sena’s Dussehra rally and also on the occasion of announcement of a Rs 10,000 crore package for flood-hit districts, Thackeray had claimed that GST had failed and the Centre needs to revert to the previous tax regime.

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Free Press Journal