Maharashtra’s loan burden is set to balloon to Rs.4.7 lakh crore in 2019-20, a 62% jump in five years since 2014-15. In effect, notionally, every citizen in the state will owe Rs.39,000 at the end of the fiscal. Government liabilities stood at Rs.4.14 lakh crore in 2018-19 and are steadily mounting.
A quick check of the financial situation revealed that despite the best efforts of CM Devendra Fadnavis, resource mobilisation has not been impressive and even as debt climbs, huge allocation of funds will be required to implement the recommendations of the seventh pay commission, construction of the Ambedkar and Shivaji memorials and the farmer loan waiver scheme.
Former finance minister Eknath Khadse said there was nothing illegal in raising loan, but it must be utilised for productive work and not for populist schemes and memorials. “Most of the state governments are raising loans, but such funds must be used for enhancing production, creating job opportunities, completing pending infrastructure projects and employment generation. Then only refund of loans is possible in a time-bound period,” Khadse said. If a major part of the state’s resources goes into servicing loans, grossly inadequate funds will be available for development and infrastructure projects, he explained.
The state’s salary and pension bills have jumped by 125% and 109%, respectively, over the past five years. The interest on loans is also up 47%, presenting a challenge to any government. A month after he took over in October 2014, CM Fadnavis had told senior officials at Nashik that he feared that the day was not far off when his government would be compelled to secure loans to pay salaries.
Congress state president Ashok Chavan said that the financial situation was alarming. “When we were in power, Fadnavis and (finance minister Sudhir) Mungantiwar had demanded a White Paper on the state’s economy. Now, the situation is worse, Maharashtra’s debt burden is the highest ever and both the CM and FM are silent,” he said.
A senior bureaucrat said in the current year, there will be an additional burden of Rs.22,000 crore for implementing the recommendations of the seventh pay commission, Rs.34,000 for the loan waiver scheme, as well as huge amounts for the Ambedkar and Shivaji memorials. “We will have to set new targets for enhancing resource mobilisation in view of recession in the real estate industry. Certainly, we will achieve the target for excise duty, but we are doubtful if we will complete the target in the real estate sector,” he said.
In the existing Rs.4.1 lakh crore liabilities, the highest burden is of market borrowings by the government which stand at Rs.2.6 lakh crore, followed by outstanding against special securities issued to the NSSF (National Social Security Fund) which is at Rs.0.6 lakh crore.
Reserved deposits and provident funds are the amounts that are outstanding at the end of 2018-19 budgetary year, besides the borrowings from financial institutions.