THE LINGERING effects of the pandemic-induced lockdown and consequent slump in economic activity continued to impact Maharashtra’s economy, which saw its debt burden spiral to Rs 6.49 lakh crore, one of the highest for any state in the country.
While Maharashtra will be spending Rs 48,263 crore this year to service this debt, the high debt levels constrain the state’s ability to go for higher capital expenditure. In the budget 2022-23, the government has proposed a further increase in borrowings to fund infrastructure development in the state.
“An efficient debt management has been carried out, which has led to the decline in the average interest cost on the debt stock. However, due to infrastructural development, the government borrowings have increased and is expected to remain elevated in FY 2022-23. The total state borrowings should be within 25 per cent of the state GSDP,†the state’s fiscal policy statement said. The high debt burden and the widening fiscal deficit, which is expected to be Rs 89,598 crore in 2022-23, is going to put a squeeze on the state’s capital expenditure. For 2022-23, the MVA government has set aside Rs 67,624 crore for capital works, which is only 12.33 per cent of the total spend estimates.
By March-end this year, the revenue deficit is projected to reach Rs 30,725 crore. The last time the state had recorded a revenue surplus was in 2018-19 when a surplus of Rs 11,975 crore was recorded. While the Centre’s 14th Finance Commission norms require states to maintain a revenue surplus position, the government has projected a deficit gap of Rs 24,353 crore even in 2022-23.
Meanwhile, the harmful impact of the Covid-19 pandemic on the state’s economy is gradually fading, with the economy finding its footing again. This has translated in the state only marginally downsizing its income target for 2021-22 to Rs 3.62 lakh crore from Rs 3.68 lakh crore in the previous financial year. For this year, the revenue forecast is Rs 4.03 lakh crore.
“With the recovery from Covid-19 and consequent lifting of restrictions, the regular economic activities are resuming resulting in an increase in revenue collections,†the state’s fiscal policy statement said.
Meanwhile, Maharashtra has also revised its revenue expenditure from Rs 3.79 lakh crore to Rs 3.92 lakh crore for the current year. For the coming year, it has forecasted a higher revenue expenditure of Rs 4.27 lakh crore. The state government also said that its priorities for this year will be to increase tax collection and strengthen the enforcement machine.
“The CAG has advised augmenting non-tax revenue base. In view of this, priority will be given to increase the rate of tax and non-tax, which have not been revised for many years,†the fiscal policy statement said.
The government is also concerned about the negative impact of the ongoing Russian invasion of Ukraine and the problems it may create for recovering economies around the world, including India.
