New government faces 3-fold challenge

Even though the BJP-Shiv Sena alliance has come back to power, it will not be smooth sailing for the new government in Maharashtra. There are multiple economic, political and social challenges that must be faced.

The immediate challenge is to effectively tackle the ongoing economic slowdown. According to a report from the market research firm Nielsen India, titled 'India FMCG Growth Snapshot,' the country's richest state, Maharashtra, is leading the ongoing economic slowdown in the country.

The report on the Fast Moving Consumer Goods (FMCG) sector clearly observes that the rural downturn is reaffirmed in key macro-economic indicators comprising deceleration in rural output, reduced government spending and ill-timed rainfall, affecting crops.

Against this backdrop, the government also faces constraints in increasing the tax and non-tax revenues amidst the likely cut in the state GST collection and fall in fuel-based taxes due to rapidly decreasing fuel consumption. This is crucial, as fuel-based taxes constitute more than 45 per cent of the state’s tax collection. In addition to this, government debt has soared to Rs 4.71lakh crore while the revenue deficit is estimated at Rs 20,000cr-plus, in 2019-20.

This will leave the government with limited resources to boost capital expenditure and to meet various poll promises, including the setting up of 1,000 eateries across the state, which will serve meals for Rs 10 each, the reduction of electricity tariffs by 30 per cent for consumption below 300 units, the development of a water grid to make the state drought-free, social security for labour, constructing 30,000 kilometres of rural roads and rehabilitating the families of martyred soldiers.

Besides, the government will have to bear the additional burden on relief measures in districts affected by prolonged rainfall on the one hand and on the other, by drought. The government will have to effectively tackle the economic challenge to double agriculture income by 2022 and achieve a US$1 trillion dollar economy by 2024.

The political challenges are many. Although the BJP-led government from 2014-2019 has implemented Maratha reservation, the Supreme Court is yet to decide the case. The politically influential Dhangar community is set to rake up its reservation demand, which was unheeded by the previous government. The community is not happy with the government's decision to allocate Rs 1,000 crore for the implementation of about 13 different schemes right before the recent assembly election, as Dhangar leaders said that it is not a permanent solution. Already, the Shiv Sena is persuading these leaders to keep up the pressure on the BJP.

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