MVA got to junk $1 tn economy target, revisit BJP govt's industry, investment policies
Amidst slowdown and falling tax revenue, the Maha Vikas Aghadi government faces a huge challenge to revive the economy, mop up adequate funds to fulfil poll promises, and to complete ongoing development projects. In an exclusive interview, state Finance Minister JAYANT PATIL spells out the government's strategy.
Q: What is the current state of finances?
Maharashtra will have a revenue deficit of Rs 43,000 crore and a fiscal deficit of Rs 62,000 crore by the end of 2019-20 fiscal. The previous BJP-led government had made several financial commitments even for small projects. The MVA government has started prioritising these commitments to curb the expenditure. The government expects to trim the revenue deficit to Rs 30,000 cr.
The government has to bear an additional burden of Rs 24,000 crore annually due to the implementation of the 7th Pay Commission report. In addition to this, it will have to shell out Rs 5,000 crore annually to pay arrears towards the Pay Commission report. The MVA government has now committed expenditure on crop loan waiver. This is an additional burden. The government may find it slightly difficult to bear these expenses. However, it will mop up funds to implement the crop loan waiver which was urgently needed to help farmers in distress.
The government has sought financial assistance of Rs 14,000 crore to help farmers hit by untimely rains, cyclone and floods.
Q: The State's debt is surging. Is it a matter of concern?
A:
Maharashtra has a total debt of Rs 6.71 lakh crore of which Rs 2 lakh crore is offbudget borrowings raised by government undertakings like Mumbai Metropolitan Region Development Authority for a slew of transport infrastructure projects like Metro, Expressway and Sea Link. MMRDA is a financially sound organisation and it will repay its loans. However, it may need around five years to have the desired number of commuters using these transport facilities. In that case, the government may have to pay from the state kitty, and that will be an additional burden.
Q: The deficit in GST collection and delays in payment of compensation by the Centre has added to the State's woes. What is your take?
A: The GST collection is just 6 to 7 per cent against the GoI estimate of 14% per annum. On the top of it, the government is not giving any priority to make up the shortfall in GST collection by timely payment of compensation. Of the Rs 8,600 crore compensation pending for four months, GoI has released Rs 4,400 crore last week and the balance Rs 4,200 crore is yet to come.
The government has appealed to the Centre to release total tax dues of Rs 15,000 crore.
Q: The BJP government had set a target of $1 trillion economy by 2025. Is it achievable?
A: The MVA government will junk that target as it was just a publicity gimmick. Nothing of that sort is happening. When you announce something, substantial action is required to achieve it. However, because of the faltering economy and slow growth rate, $1 trillion economy is not possible. The government will not pursue it.
At the same, the government will create an investmentfriendly environment in the state and try to attract more investments.
The government will revisit the industrial investment and incentive policies introduced by the BJP government to push economic growth. There was no conducive investment atmosphere during BJP led government.
Former chief minister Devendra Fadnavis made announcements of receiving investment proposals of Rs 8 lakh crore in a Make India event and another Rs 13 lakh crore in a Make in Maharashtra summit. However, the government will revisit these announcements. I am sure that the new industry minister will look into all these aspects and find out if those investments will materialize; otherwise, the government will bring in new investments in other ways.