Experts have raised alarm over the state government's rising revenue and fiscal deficits and public debt. They have cautioned that Maharashtra, which had reported a revenue surplus budget in 2008-09 and 2012-13, would have to struggle a lot to eliminate its revenue deficit as recommended by the 14th Finance Commission, which clearly observed that a revenue deficit implies that the government needs to borrow in order to finance its expenses which does not create capital assets.
Anand Madhavan, CRISIL Infrastructure Advisory Director (infrastructure and public finance) told DNA, "The stickiness of revenue deficit at 0.6 per cent of GDP is a matter of concern and needs to be brought down. Capital expenditure, budgeted at Rs 37,477 crore, translates to about 1.3 per cent of gross state domestic product (GSDP) and needs to be stepped up. A greater thrust on public private partnership (PPP) initiatives could help augment resources for growth inducing capital investment." He said the revised fiscal and revenue deficit in 2017-18 possibly reflects the stress on account of agriculture loan waiver and pay commission hikes.
CARE Ratings' senior economist Madan Sabnavis said Maharashtra budget continues to show increasing revenue and fiscal deficits. "While the ratios including debt are within limits, it would have been better if fiscal deficit was increased further to accommodate capital expenditure. The focus has been on waivers and pay commission compulsions which are necessary but could have been supplemented with capital expenditure," he opined.
Leading research institute PRS Legislative Research in its analysis indicated that Maharashtra will lose central grant in 2018-19. "Revenue receipts in the form of central grants are expected to fall by 6.2 per cent in 2018-19. On the other hand, the state's share in central taxes is expected to rise by 16.9 per cent in 2018-19. This is primarily due to an increase in receipts from Integrated Goods and Services Tax (IGST) and Corporation Tax." The total revenue receipts for 2018-19 are estimated to be Rs 2,85,968 crore, an increase of 11 per cent over the revised estimates of 2017-18. Of this, Rs 2,10,825 crore will be raised by the state through its own resources (74 per cent of the revenue receipts), and Rs 75,143 crore will be devolved by the Centre in the form of grants and the state's share in taxes (26 per cent of the revenue receipts).
Further, PRS said the government in 2018-19 will spend Rs 1,02,668 crore on employee salaries. In addition, the government will spend Rs 27,378 crore on pensions. Together, they constitute 35 per cent of the total expenditure.
"While the absolute expenditure on salaries and pensions has increased over the last few years, its share in the total revenue expenditure has been around 45 per cent. This indicates that the rate of growth in expenditure on salaries and pensions is similar to the overall growth in revenue expenditure," it added.
On the state's public debt estimated at Rs 4.61 lakh crore in 2018-19, both CRISIL and PRS observe that it was well within the limit of the 14th Finance Commission. PRS said debt as a percentage of GSDP has come down from 21.3 per cent to 16.5 per cent during 2008-09 to 2018-19 (budget estimate). "However, from 2016-17 onward, this percentage has been increasing," it added. However, a retired bureaucrat, who did not want to be named, noted that the state government faces a huge challenge to revive finances amidst rise in revenue and fiscal deficits, dip in central grants and constraints on the mobilisation of resources.
- Finance Minister Sudhir Mungantiwar has estimated a revenue deficit of Rs 15,375 crore in 2018-19.
- Revenue deficit increased from the budgeted target of Rs 4,511 crore to a revised estimate of Rs 14,843 crore (229 per cent increase) in 2017-18.
- The rise may be attributed to excess agricultural expenditure due to farm loan waivers and energy sectors.
