New CM in hot seat

The new government will have to spend Rs 15,343 crore on debt servicing including Rs 11,394 crore on interest on loans availed. The revenue of is estimated at Rs 40,394 crore which means it would be spending more than one-third of its revenue on debt servicing. This leaves little for development.

The state administration has prepared a plan to tide over the crisis but it includes some ‘bold’ decisions which the government did not implement in the last five years:

• Reduction in borrowings

• Curb salary-related expenditure

• Divestment of PSUs

• Augmentation of revenue by auctioning government land and liquor shops and reintroduction of Octroi

• Minimising guarantees extended to cooperative units.

Former finance minister Jayant Patil (NCP) says: ‘‘We did our best. Whatever we did is before the people and they have voted in our favour.’’ His predecessor Eknath Khadse (BJP) pins the blame for the ballooning fiscal crisis entirely on the five-year rule of the Congress-led coalition. The biggest problem is the guarantees extended to the cooperative sector to borrow from financial institutions. Each time they defaulted the government had to cough up the money; the guarantees now stand at Rs 67,855 crore.

The debt trap?

• The consolidated debt by the end of fiscal year 04-05: Rs 1,10,211 crore

• Amount to be spent on debt servicing by year end: Rs 15,434 crore

• Interest burden due till the year end: Rs 11,394 crore

• Expected revenue: Rs 40,394 crore