Maharashtra government’s mountain of debt may derail Devendra Fadnavis’s plans

Mumbai(PTI): While the Devendra Fadnavis-led state government has made ambitious promises like kick-starting stalled infrastructure projects for Mumbai and abolishing toll charges, the massive pressure on the state exchequer may put a wrench in such ambitious plans. The state has an around Rs 2.85 lakh crore debt burden which is expected to balloon to about Rs 3 lakh crore by end of the current fiscal.

On the revenue side, the decline in motor spirit prices may affect collections of value added tax (VAT), with the state just managing to meet the Rs 69,000 crore target. The various aid packages for farmers affected by natural calamities have increased the outgo.

In this situation, senior officials admit that some tightening of purse strings may be necessary.

A senior state finance department official told dna that the increase will be because of the new loans that the government takes from time to time, the debt servicing burden, which is around Rs 24,000 crore annually, inflation, increase in non-plan expenditure like dearness allowance, and the various welfare packages announced for farmers affected by natural disasters.

In 2013-14, the collections of the sales tax department were Rs 69,777.23 crore, more than Rs 65,083.25 crore in 2012-13 and Rs 56,591.21 crore in 2011-12.

“Borrowings per se are not bad, but they must be used judiciously for the purpose for which these loans have been taken and the net positive value of the utilisation must be greater than the interest servicing,” the official said, adding that since Maharashtra accounted for 14% of the country’s economy, “a big elephant will consume more food.” He noted that loans amounted to “deferred taxation” as the repayment amount had to be recovered from taxpayers through an increase in existing taxes or new levies.