Addressing Rs 6.7L rupees of Maharashtra's debt could be Uddhav's biggest challenge
MUMBAI: addressing the financial situation will be the biggest challenge for the new CM Uddhav Thackeray, with a total state debt burden of Rs6.71 lakh crore.
During the five-year term of Uddhav's predecessor, Devendra Fadnavis, the state debt burden increased from Rs2.94 lakh crore to Rs4.71 lakh crore, while loans worth Rs2 lakh crore were secured for The infrastructure sector. Alarmed by the shortage of resources, the finance department on July 8, 2019 imposed a 40 percent cut in spending on key departments.
A senior bureaucrat confirmed to TOI that, while there had been a spiraling growth in the debt burden, no strict measures were taken to mobilize and conserve resources. “Successive chief ministers did not take the matter seriously and, at one stage, it seemed that the government would have to obtain loans to pay the salaries of government employees. Fortunately that situation was avoided, ”he said.
The bureaucrat said the wage burden increased from Rs 59,735 million in 2013-14 to Rs 11,5241 million in 2019-20, pension of Rs 15,186 million to Rs 36,368 million and interest on loans of Rs 14,838 million to 35,207 Rs million .
The bureaucrat admitted that although the cost of establishment is higher in the state, no concrete measures were taken to address it. In 1999, the then finance minister Jayant Patil had presented a white paper on the state's economy. The BJP leader and the Fadnavis government finance minister presented an almost identical document. Both promised that the cost of establishment will be drastically reduced and unproductive state corporations and boards will dissolve. The concept in both documents was appropriate, but there was a lack of political will to implement, he said.
According to data collected by the finance department, while the cost of establishment in Maharashtra was 47.3%, it was 33% in Gujarat and 27% in Karnataka. In addition, the debt burden grew as the state assumed the cost of implementing the recommendations of the Seventh Payment Commission, exemption from agricultural loans, Shivaji memorial, Ambedkar memorial and infrastructure projects (see graphic).
The former finance minister said the government is paying a high price for the recession in real estate, particularly in Mumbai. The economy of the city has collapsed since construction activity stopped, and there is less collection of the registration fee and. In my opinion, the implementation of RERA has also contributed to the slowdown, ”said Khadse.
Khadse said the Fadnavis government had undertaken infrastructure projects worth Rs2 lakh crore without realizing the burden this would pose to the state treasury. “We launched the Nagpur-Mumbai highway, several Metro projects in Mumbai and the bullet train project. In addition, the loan exemption will require Rs35,000 rupees, ”he said, adding that he has been told that in the recent past, the state has secured loans for the payment of wages and interest on loans.
Khadse said that after the introduction of the GST, there are limitations in resource mobilization. Except for gasoline and liquor, the state government has no room to increase taxes on any item, he said.
A former chief secretary said it was time for Thackeray to launch a massive campaign to address the debt burden. “We will have to mobilize and conserve resources. A cost reduction exercise should be carried out at all levels. Labor must be used effectively. You should have a new look at how people are appointed in the office of a cabinet member. A member of the cabinet has a staff of 16 people and they also appoint several OSDs, ”he said.
He noted that Thackeray will have to bring changes from his own office, since a few days ago an order was issued to provide for the appointment of 146 people in his office, including seven OSDs. Fadnavis also had a similar number of employees, but it looks huge and can be reduced, he said.