Maharashtra budget 2018-19: 57% of state revenue to be spent on salaries, pension, interest payments

The implementation of the seventh pay commission from this fiscal year and rising debt stock will bring negative impact on the state’s income.

The state government in its budget for 2018-19 has estimated that 57.50% of the total revenue is going to be spent on salary, pension of its employees and paying interest of the debt, which is 3% rise in expenditure compared to the last year.

In 2017-18, this expenditure was 54.87%. The situation may further worsen next year as the state government has allocated Rs 10,000 crore for revising pay scale of its staff against the estimated expenditure of Rs23000 crore. This means the scope for spending on development works will be reduced further.

Sudhir Mungantiwar, state finance minister on Friday, while presenting his fourth budget, said, the state government’s revenue has increased by Rs28,363 crore. With the rise, the revenue expenditure of the state has also gone up with similar proportion — Rs28,895 crore. The reason being, the state government has decided to accept recommendations of the seventh pay commission which means revision in the pay scale of the 18 lakh employees of the state government that includes 7 lakh pensioners. The move is likely to cost the state exchequer a whopping Rs23,000 crore.

Another reason for surge in expenditure is the rising debt of the state. For 2018-19, the state government has estimated that debt will rise to Rs4.61 lakh crore from Rs4.06 lakh crore, which also means that the payment as interest against debt will increase simultaneously.

A closer look at the budget book shows that the state expenditure on salary, pension and interest payment is estimated to rise from Rs1,41,352 crore to Rs1,64,431 crore this fiscal year. Of which, the expenditure on salary and pension alone is Rs1,30,046 crore while on interest it will be Rs34,385 crore.

Mungantiwar said, “The situation was even worse when we came to power four years ago. This expenditure has gone up to 62.55% in 2014-15. But we managed to bring it down gradually to 54.87 in 2017-18. This year, it has again gone up due to the seventh pay commission, which we have already committed to give to the government employees.”

Dr Abhay Pethe, economist said,“The government was left with no choice but to make this committed spending. The percentage of this expenditure would have fallen if the state income has grown significantly. The growth rate of the state has come down to 7.3%, which should be at least 9% to 9.5% to manage such situation. The agriculture growth has also gone negative,” Pethe said.