Maharashtra’s Finance Minister Sudhir Mungantiwar said the Budget will send out a message that this government wants to work for the welfare of the people.
Maharashtra’s Finance Minister Sudhir Mungantiwar is set to present the Devendra Fadnavis-led government’s fourth and arguably the toughest Budget yet. Mungantiwar tells Sandeep Ashar how he plans to address agrarian distress, create jobs and boost capital spending while at the same time seeking to improve fiscal prudence.
Maharashtra’s Accountant General’s latest monthly estimates seem to suggest the state is headed to post its worst-ever fiscal deficit. What is the state of the state’s economy?
There is bound to be stress on the economy when you spend so much on the farm loan waiver. But it was a step that was necessary. Another stress point for the economy has been the state’s share of the expenditure on big infrastructure projects that has been higher than expected. So yes, the fiscal and revenue deficit will widen this year.
Having said that, the state’s economy is still in good shape. We are better than other states when you consider parameters such as growth rate, debt-GDP ratio and revenue collections. Niti Aayog’s Vice Chairman (Rajiv Kumar), who was in Mumbai recently, praised the state’s income side performance and its ‘Chanda to Banda’ development model in particular (the model focuses on synergising development activities with greening initiatives).
Even more worrying is the ballooning of revenue expenditure. In 2018-19, the state’s salary bill will shoot up significantly owing to the anticipated rollout of the Seventh Pay Commission for state employees. Given the fiscal tightrope, how will the government boost capital spending?
Our focus has always been to enhance public sector capital investment. We have spent several thousand crores from the state’s kitty for completion of irrigation projects, rural roads. And I can assure you the capital expenditure won’t be squeezed despite the tight fiscal position.
Your white paper on finances had earlier blamed the previous Congress-led government’s economic mismanagement for the failing health of the economy, while promising fiscal consolidation. But the criticism is you’ve consistently missed fiscal targets?
Maharashtra was in the spectre of drought when we took over. We had to raise resources to mitigate drought conditions prevalent in Marathwada. Then this year, we had to roll out the farm loan waiver. You see we have prioritised ‘Bhook Shastra’ (elimination of hunger) over Arthashastra (economy).
But when we took over, the growth rate was just 5.8 per cent. It has now reached 9.8 per cent. Similarly, the agriculture growth rate was -12.5 per cent, we reversed it to +19.5 per cent. The debt-GDP ratio was 17.9 per cent, we brought it down to 15.5 per cent last year. This year it is expected to be around 16.6 per cent. Since we have been avoiding the thin spreading of irrigation funds, we have achieved 3.10 lakh hectare of additional irrigation potential, while the direct benefit transfer has significantly reduced leakage in social welfare initiatives.
The major focus of the Centre’s Budget this year was on the farm and rural economy. With the agrarian distress being an issue in Maharashtra as well, what would be the focus of the state’s upcoming Budget?
The spirit of the overall development of farms and rural growth will constitute the core of the state Budget too. The farmer has been the focal point of our previous Budgets too. Our focus has been on building infrastructure to boost rural economy.
The silver lining this year has been buoyancy of tax revenues. What will be the focus on the income side measures next year?
Maharashtra has topped GST collections. Revenues from most of the other tax resources have also been buoyant. Since the GST is a consumption-based tax, our focus would also be to push for the expansion of the services sector. With limited avenues of mobilising additional resources from tax revenue, our focus will also be on shoring up non-tax revenues, such as fees and interest receipts.
The Opposition has been attacking the government over the lack of job creation. What are the plans to boost employment?
Job creation is being taken up on a mission mode. Our plan is to create a vibrant ecosystem for job creators and aspirants. The plan is to develop enterprise districts that would drive growth and fuel employment opportunities. We’ll focus on five key elements — including supply, skills, financial support, motivation and positive perception – for expansion of the job market. You’ll have to wait for my Budget speech to learn more.
Collections from land revenue have been disappointing for the second consecutive year. Your much-hyped land securitisation model has also failed to take-off.
My department officials are working closely with other departments concerned to review the situation. Land assets across the state are being surveyed for their utilisation value and worth.
The chief minister has said off-budget borrowings would be used to fund big-ticket infrastructure projects. But then, does it not increase the state’s already burgeoning contingent liabilities?
The idea is to raise alternative resources to push for implementation of crucial infrastructure projects, especially those related to mass transport systems such as Metro rail projects, Mumbai’s Trans Harbour Link, the Samruddhi Corridor.
There are set guidelines regarding borrowing limits even in case of off-budget external commercial borrowings. We’ll stick to them. It is hoped that the projects will be executed without time and cost overruns and will yield adequate revenue enabling the special purpose vehicles concerned to service debt without creating financial liability for the government.
Preliminary estimates suggest each state will need to contribute Rs 4,330 crore annually to roll out the Centre’s National Health Protection Scheme. What is Maharashtra’s plan?
The state already has its own health protection scheme – the Mahatma Jyotiba Phule Jeevandayi Arogya Yojana. We’ll integrate this with the NHPS. We had allocated Rs 1,200 crore towards the state’s scheme premiums in 2017-18. The plan already was to raise the same to around Rs 2,400-2,500 crore this year.
The 15th Finance Commission has now been formed. One of the things Maharashtra has been sore about is lack of incentives for performing states. Maharashtra contributes 15 per cent to India’s GDP. It accounts for 19.68 per cent of India’s service sector and 20.50 per cent of the industries sector. Our stance is that incentivising performing states will only encourage them to perform better while promoting a competitive spirit among all states.
Mumbai’s real estate sector has raised certain concerns over how taxability under GST has hit affordability in the housing sector. How do you plan to address these concerns?
We have been holding discussions with various stakeholders. Certain concerns have been raised. I’ll be raising it during the GST council meeting.
Finally, what is the big political message one can expect from the Budget?
The Budget will send out a political message that this government wants to work for the welfare of the people. That we want to use the position of power to empower people. I’m confident people will appreciate the message.