The Maharashtra government can borrow a total of Rs 1,40,000 crore in the current fiscal 2020-21 with the Finance Minister’s announcement of increasing the state government’s borrowing limit to 5 per cent from 3 per cent of the Gross State Domestic Product (GSDP) . Maharashtra government, in its budget presented on March 6, had budgeted Rs 52,000 crore, which was 1.7 per cent of the GSDP. But with today’s decision, it can borrow additional Rs 88,000 crore in the current fiscal.
With this, the government, whose revenue is hit hard due to the lockdown, can plan expenditure better and tie up expenditure in a planned manner.
A senior minister told the Free Press Journal, “The state government has been in favour of increasing the borrowing limit to 5 per cent of GSDP to cover the shortfall of at least Rs 1.40 lakh crore in the budgeted revenue. Despite revenue shortfall due to the lockdown, the state government has substantial headroom to raise borrowings without disturbing the long term fiscal health of the state. As soon as the economy and state finances resume their normal trajectories, these additional borrowings can be tapered off.’’ He informed that the 11-member committee, comprising serving and retired bureaucrats, had unanimously recommended that the borrowing limit be relaxed to 5 per cent of GSDP for 2020-21.
The Centre’s decision will help the state government, which is badly hit by the lockdown, to revive its economy. Revenue receipts projected in the state budget for 2020-21 was Rs 3,47,000 crore, but as per the revised estimates, the expected revenue shortfall will be Rs 1,40,000 crore. This will be around 40 per cent of the expected revenues and will leave a huge hole in the state finances.