Finance Commission red-flags state’s slow growth, disparity
MUMBAI: Ahead of its visit to the state, the fifteenth Finance Commission of India has sounded an alarm over Maharashtra’s financial condition. Besides the fall in the revenue during the four years of the Devendra Fadnavis-led government, the growth trend and the tax revenue too has sharply declined. There is also a sharp socio-economic disparity across districts, the commission has remarked.
The Finance Commission released its observations after meeting experts from the state and deliberating with the Accountant General of Maharashtra. Its observations appear to be indicative of fiscal indiscipline during the current regime in the state. The Commission has stated that revenue receipts fell to 11.05% in 2014-17 from 17.69% in 2009-13. The growth trend of the state’s tax revenue declined from 19.44% in 2009-13 to 8.16% in 2014-17. “The fiscal deficit of the state continues to be well within the limit of 3% of gross state domestic product (GSDP). The debt stock to GSDP ratio is also well within the 17.5% limit set by the Maharashtra Fiscal Responsibility and Budgetary Management Rules. Yet, a revenue deficit of 0.5% of GSDP continues to be a worrisome factor,” the report stated. “The revenue deficit to GSDP ratio has increased even as the fiscal deficit to GSDP ratio has fallen. This indicates that debt is being used for revenue expenditures. Revenue expenditures show rigidities due to the presence of high levels of salary and interest payments,” stated the report released on Saturday.
Finance minister Sudhir Mungantiwar however said the Commission has not considered the revenue growth of 22% this year. “We could register surplus growth from the estimated deficit for the financial year 2017-18 as per the audited figures released by the Accountant General . We will bring this to the attention of the Commission. The situation is not as alarming.” The Commission is visiting Maharashtra between September 17 and 19.
“The state should focus on revenue generation capacity. This has happened despite the rise in the devolution of central funds from 11% to 16% of total revenue receipts during 2012-17,” the report stated. The Commission also rapped the state for poor funding to urban local bodies as compared to rural local bodies. It has also red-flagged the slow pace of decentralisation. It has also criticised the state for the poor irrigation percentage (18%) despite having 35% of country’s irrigation projects.
The Commission has also criticised the state for the sharp socioeconomic disparity. “Sixteen districts in Vidarbha and Marathwada have per capita income below the state and national average. 125 of the 351 tehsils have been identified as socially backward on human development index. Among Scheduled Tribes, the poverty rate is high,” the report said.