The BJP-led Maharashtra government is considering a proposal to advance its annual budget by a month and present it in early February, like what the Central government plans to do for fiscal 2017-18. The state also plans to end the distinction between plan and non-plan expenditure.
The state government has already held talks on this with the NITI Aayog.
Speaking to The Indian Express, Maharashtra Finance Minister Sudhir Mungantiwar said, “The state government is keen on presenting its annual budget for year 2017-18 in February instead of March. We are also planning to merge plan and non-plan expenditure. We have discussed the issues with NITI Aayog. The details are bring worked out.”
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Mungantiwar said the primary reason for advancing the budget was to reduce the lag between the Centre and the state on new policies and financial allocations. After presenting the state budget in March, it takes at least a couple of months to set the process resulting in loss of time.
“Advancing the budget to February will help us in smooth transition from one financial year to next,” said the minister.
Maharashtra’s proposed move comes at a time when the Narendra Modi government at the Centre is looking at presenting the 2017-18 Union budget in early February to ensure that the budget process is completed before the end of March so that spending on schemes and programmes can kick off at the start of a new fiscal in April.
Besides, with the introduction of the Goods and Services Tax (GST) being proposed from April 2, 2017, the government is keen on presenting the Union budget in the first week of February rather than the end of that month as has been done traditionally.
In September this year, the Central government decided to do away with the distinction between plan and non-plan expenditure from next fiscal to better reflect spending. From 2017-18, expenditure will be classified only under tow heads — revenue and capital. Salaries or wages, interest payments and subsidies fall under revenue expenditure while spending on programmes or schemes, which lead to creation of financial or social assets, are classified as capital expenditure. “Maharashtra too wants to follow the same path,” said the finance minister.
“Time has come to demand greater accountability in higher revenue expenditure. We have to give more attention on enhancing the capital investments for better development and growth in the state,” said Mungantiwar.
The size of Maharashtra’s budget in 2016-17 was Rs 2.57 lakh crore and the government says the aim is to reduce non-productive expenditure. The FM said a higher non-plan expenditure did not auger well for the state’s economic growth, and merging plan and non-plan would help focus better on comprehensive policies and streamline the wasteful expenditure.
Acknowledging the need for greater fiscal reforms and higher revenue generation, he said, “The capital investment projection for the year 2016-17 is Rs 32,000 crore. Last financial year, it was Rs 28,000 crore. Despite the severe drought and a setback to agriculture growth, we managed to increase the Gross State Domestic Product (GSDP) from 5.8 per cent to 8 per cent. And in 2016-17, I expect the GSDP to cross double digit.”
Maharashtra has a debt burden of Rs 3.5 lakh crore, with Rs 29,000 crore going towards servicing interest payments alone. Mungantiwar claimed that amendments to the purchase policies and rate of contracts helped save Rs 3,500 crore over the last two years.
He said the four-slab GST would work to the state’s advantage.
On the fiscal challenges over the next three years, Mungantiwar said the government would need Rs 45,000 crore for irrigation projects and Rs 2 lakh crore for infrastructure and road projects. “Now, the annual budget of Rs 8,000 crore for water resources will never lead to completion on any project. We are exploring all options including land monetisation, private bonds and borrowing from global financial institutions to pursue the projects across sectors.” he said.
The minister said the finance department was not against stalling any project, but departments allocated funds would have to give an explanation fir every penny and show the results.