Two years since the announcement of farm loan waivers worth Rs 34,020 crore, Maharashtra has provided Rs 21,925 crore for the waivers, or about 64 per cent of the total announced amount. Even though the state government last month approved expanding the scope of farm loan waivers ahead of the upcoming election, over one-third of the amount announced earlier is yet to be provided for, according to the statistics provided by the state to the Reserve Bank of India.
The slow progress on the farm loan waiver allocations could have a bearing on the government’s fiscal health staying within the stipulated caps outlined by the fourteenth Finance Commission, with the fiscal deficit for 2018-19 recorded at 2.1 per cent of Gross State Domestic Product (GSDP). For 2019-20, it has been pegged at 2 per cent of GSDP. Also, while development spending by the Devendra Fadnavis administration has been rising over progressive years, asset creating capital expenditure as a per cent of the total expenditure, which picked up in the initial years of the present government to 13 per cent, has subsequently slid — down to 10.3 per cent of the total expenditure in 2017-18.
The state, which has the highest share in the country’s nominal GDP at 14.4 per cent, has seen its per capita income grow by over 44 per cent at constant prices in the last five years from Rs 1,32,476 in 2014-15 to Rs 1,91,827 in 2018-19.
As per the RBI’s ‘State Finances: A study of Budgets of 2019-20’, the Maharashtra government had announced farm loan waiver of Rs 34,020 in 2017-18, of which the Centre provided for Rs 15,020 crore or 0.8 per cent of the state’s GSDP in the first year itself, which reduced to Rs 6,500 crore or 0.3 per cent of the GSDP in the subsequent year. The Centre provided only Rs 405 crore for farm loan waiver in this year’s Budget, which is almost equivalent to zero as a percentage of the state’s GSDP, the RBI report showed.
While asset-creating capital expenditure as a per cent of the total expenditure has been struggling after an initial uptick, development expenditure — comprising expenditure incurred on social, economic services and grants-in-aid to local bodies and panchayat raj institutions — has, however, picked up gradually in the state over the past five years. From Rs 1.26 lakh crore in 2015-16, development expenditure rose Rs 1.63 lakh crore in 2017-18. As a per cent of the aggregate disbursement, development expenditure of Maharashtra has been over 60 per cent during the last three financial years.
Expenditure on agriculture and allied activities, which has about 46.1 per cent of the workers in the state, increased to Rs 23,468 crore, or 6.3 per cent of the total expenditure, from Rs 9,660 crore, or 4.3 per cent of the total expenditure in 2015-16. For 2019-20, however, the state has allocated 6.1 per cent of its total Budget towards agriculture and allied activities, lower than the 6.4 per cent average allocation of other states.
Maharashtra’s proportion of spending on other key social sectors such as education and rural development has been higher than the national average. In FY20, Maharashtra allocated 18.9 per cent of its expenditure on education, higher than the average expenditure of 15.9 per cent allocated to education by other states. On the health front, the state has allocated 4.2 per cent of its expenditure, lower than the 5.2 per cent average expenditure of other states.