Maharashtra spending on development works dips, finance minister expresses concern

The share of capital expenditure in Maharashtra’s budget has come down from 17.2% to 9.88% in more than a decade. It means the state’s spending on development works is reducing significantly.

State finance minister Sudhir Mungantiwar on Wednesday expressed concern over squeezing of capital expenditure resulting in less allocation to the development works. He also stressed that the situation needs to be improved.

He was replying to a discussion on state budget in the state assembly on Wednesday.

Mungantiwar said the state government is also trying to get compensation against scrapping of local body tax (LBT) and Octroi from the central government, which goes to the tune of Rs17,000 per annum.

At present, the state government compensates revenue losses of the local bodies for scrapping LBT and Octroi, which was also their main source of income. The LBT was abolished in August 2015, a poll promise made by the Bharatiya Janata Party (BJP) in the run up to the polls in 2014. The move then cost the state exchequer more than Rs8000 crore. With imposition of Goods and Services Tax (GST), the Octroi was also scrapped, which was implemented only in Mumbai till last year. BMC’s annual earnings from Octroi was Rs7,700 crore.

Mungantiwar said the population and number of employees in the state when compared to the neighbouring states such as Gujarat and Karnataka is much more. The state spends 43% of the total revenue on salary and pension of its employees.

“Adopting the role of a welfare state we also spent significant amount on welfare schemes. I admit that the capital expenditure percentage is reducing and we need to improve the situation,” the finance minister said. The issue was raised by the opposition leaders while participating in the debate on state budget in the lower house.

According to the budget book 2018-19, of the total expenditure of Rs3.39 lakh crore, the state government has allocated Rs37,477 crore as capital expenditure, which comes to 9.88% of the total expenditure. Last year, the amount was even less – Rs33,614 crore. The white paper released by the BJP-led government in 2015 says, “In 2004-05, the capital expenditure of the state was 17.2% which has come down to 11.5% in 2014-15. The state has failed in building capital assets as it was required, which has helped in boosting the economy in the long run.”

Mungantiwar said the state government is still trying to convince the Centre over compensating the financial losses the state is bearing for scrapping LBT and Octroi.

“While scrapping the LBT, we were under impression that the central government will compensate us for the losses, but that didn’t happened. However, we have not lost all hope and are still trying to convince them to provide us compensation amount,” Mungantiwar said.