The STATE government on Tuesday directed state-run departments to step up investment in ongoing infrastructure and development works. The directives come at a time when private sector capital expenditure in the state has contracted and cut in revenues has also impacted the state’s ability to invest in development works.
In a notification issued by the state’s finance department on Tuesday, the government has asked departments to make sure that 67 per cent of the released development funds are utilised for completion and payments of ongoing works.
“The idea is to spur up demand and revive the economy while curbing thin spreading of funds,” a senior official said.
After imposing a freeze on new capital works for the first seven months of the lockdown, Maharashtra had partially eased the curbs for departments involved in job and asset creation on the back of an improvement in cash flows and income in October.
As per orders issued on November, all such departments were permitted to utilise 75 per cent of their sanctioned development funds for 2020-21. Fearing that there will be a rush to undertake new development works resulting in thin spreading, the government has now issued guidelines clearly directing the departments to prioritise ongoing works and payments related to these. The government has also permitted 100 per cent utilisation of funds sanctioned under the local area development funds allocated to legislators and also the funds sanctioned as per the works approved under the district plan.
In March, Finance Minister Ajit Pawar had increased the annual allocation of this discretionary fund from Rs 2 crore to Rs 3 crore per legislator. The finance department has also already lifted spend curbs on development works funded under the Rural Infrastructure Development Fund (RIDF) scheme of the National Bank for Agriculture and Rural Development (NABARD).
With the government forced to borrow to meet its monthly wage bill, an expert committee formed by CM Uddhav Thackeray for economic revival has recommended funding of rural road and irrigation works through borrowings at 3.5 per cent interest under the RIDF. After presenting a Rs 4.34 lakh crore budget for 2020-21 and an increased allocation of 4.1 per cent over the revised estimate of 2019-20 in March, revenue losses due to the coronavirus lockdown had forced the state to impose a 67 per cent cut in development (scheme) spend in May. This is the deepest ever cut in expenditure since Maharashtra’s formation. In his budget speech for 2020-21 in March, Pawar had estimated a total capital outlay (spending which leads to asset creation) of Rs 45,124 crore, but the prolonged lockdown and spend curbs have meant that the target is unlikely to be met.