Maharashtra Government’s white paper blames Cong-NCP’s decade for state’s poor growth

It also puts the previous government in the dock for ‘misdirected subsidies’, unjustified increase in revenue expenditure

Written by Sandeep A Ashar | Mumbai | Updated: April 11, 2015 12:48 am
Maharashtra Maharashtra Chief Minister Devendra Fadnavis and NCP chief Sharad Pawar.

The Devendra Fadnavis-led BJP-Sena government in the state on Friday blamed “misdirected subsidies” and unjustified increase in revenue expenditure during the previous Congress-NCP regime for throwing Maharashtra’s economy “off balance”.

On Friday, the last day of the state legislature’s budget session, the BJP-led state government Friday presented a while paper on the health of Maharashtra’s economy in the state Assembly, which it had promised shortly after coming to power. The paper also accuses the erstwhile regime for a squeeze in capital expenditure that stymied the overall growth story.

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Reviewing fiscal planning measures and government policies between 2004 and 2014, when the Congress-NCP was in power, the document said the share of spend on capital expenditure had come down to 1.7 per cent of the state’s Gross State Domestic Product (GSDP). It claimed that capital investment in Maharashtra was limited to 1-1.5 per cent, even as other states clocked an average three per cent in this segment.

Although stating that the state’s revenue income grew at a “satisfying” 16 per cent during the period, the government document claimed that revenue expenditure outpaced the revenue growth rate, owing to which “fiscal balance was disturbed.” For 2014-15, the government has projected a revenue deficit of Rs 13, 883 crore. “The increase in revenue expenditure and the rise in revenue deficit forced the government to raise loans. In ten years, the government was forced to raise Rs 1.93 lakh crore. Of these, Rs 18,304 crore went towards meeting revenue expenditure.”

The white paper also claimed that increase in revenue expenditure forced the state to become more dependent on central assistance, which has increased 22 per cent since 2009 alone. “The credibility of the state’s budget was diminished.” It has further pointed to misdirected subsidies in the irrigation, power, education, food security and industrial promotion sector, calling for restructuring of these subsidies. It has also alleged that there was regional disparity in distribution of subsidies, especially in the power sector, where districts in Western Maharashtra getting preference over the rest of the state. It said all this resulted in inadequate creation of capital assets.

Firing another salvo at the previous regime, the government has claimed that its policies lacked “long term and evidence-based planning.”

The BJP government pointed out several discrepancies in the spend incurred on capital expenditure, alleging that there was thin spreading of funds and inadequate and irregular techno-financial planning that stalled a number of projects, triggering cost escalations.The state now plans to cap number of new projects that can be taken up. In the irrigation sector, which has the highest liability, the government has reiterated that it shall take up last mile projects on priority. The government also plans to constitute an expert panel to evaluate existing schemes and projects, while adopting a business process re-engineering (BPR) model to regulate spend on salaries and subsidies. The subsidies will be linked to Aadhar cards to prevent leakages.

The BJP government, which had earlier targetted the Congress-NCP for rise in public debt (from Rs 1.09 lakh crore to Rs 3.03 crore) in the past decade, has, however, now claimed that the accumulated public debt during the corresponding period reduced from 266 per cent of the state’s income in 2004-05 to 167 per cent in 2014-15.

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