In a bid to boost aggregate demand in Maharashtra, the Maha Vikas Aghadi Government on Tuesday has announced a slew of fiscal policy measures including 75% release of funds to the works which will create assets and jobs, 100% utilisation of legislators’ fund, 100% disbursement of funds under district annual plan for various development works.
The government decision comes after it witnessed a revenue shortfall of almost Rs 46,000 crore between April and October because of a lockdown declared in the wake of the coronavirus pandemic.
The government hopes these steps will bring in much-needed churn in the economy, increase capital expenditure which will help the generation of assets and revenue, and also create employment opportunities. The state government’s debt for April-October rose by more than 170%.
The Finance Department Officer said, “There are limitations on resource mobilisation solely depending on the monetary policy and therefore the government has taken a conscious decision to explore multiple options to improve the economic situation by relying on the fiscal policy. Despite a revenue shortfall, the government is making available funds for police, health, food and civil supply, and other essential services during the present coronavirus pandemic. The government has already imposed a 67% cut in the planned expenditure in May. However, the departments which will help create assets and jobs will be an exception as it will help the revival of the state economy.’’ However, it will be binding on the concerned departments to spend money on the desired objectives.
The government’s move comes at a time when its revenue collection in October has increased for the first time since April by 48.38% at Rs 21,367 crore against Rs 14,400 crore in September. Of the Rs 21,267 crore, as high as Rs 15,799 crore comes from Good and Services Tax, Rs 1,234 crore from excise duty, and Rs 1,752 crore from Stamp Duty and Registration fee.