Expect moderate taxation measures

RUN UP TO MAHARASHTRA BUDGET

Last year, when state finance minister tabled the budget forecasting revenue surplus of Rs 265 crore, little did he realise that the great deluge of 26/7 will throw the state's carefully reconstructed finances completely out of gear.

The state has so far spent around Rs 2,000 crore on relief and rehabilitation and this figure is likely to cross Rs 4,000 crore mark and helping hand of the central government is not very forthcoming. So be prepared for a revenue deficit budget and some harsh tax proposals in the state budget this year.

As VAT has clamped the rights of state finance ministers to play with the sales tax rates, other taxes like stamp duty, exise duty, transport tax etc may see upward revision.

Then finance minister will also have to do the juggling act on expenditure side as well as he has to make substantial provision for power generation, improvement of distribution network to meet state's growing power deficit which is around 4,000 Mega watt today. Then state has prepared Rs 40,000-crore plan for improving Mumbai's crumbling infrastructure but so far it has been a non-statrter.

Besides this, Patil also has to find the ways to raise the money for irrigation projects in Krishna valley. If Rs 2,500 crore are not provided for these projects over next two years, then state just might have to loose it's share of water in Krishna to neighboring state's of Karnataka and Andhra Pradesh.

However, question of providing finances to irrigation project in Krishna valley is tricky one as Krishna flows through Western Maharashtra and politicians from other parts of the state like Vidarbha and Marathwada often accuse Western Maharashtra politicians of neglecting other parts of the state. So Patil also has to find the money for the developmental projects in these regions.

Patil also has to address the issue of maintaining the financial discipline. The rising burden of debt on the state has become a thorny issue.

Patil had stated in his last year's budget speech that raising the loans through open markets is a "dangerous step". But till December end, state had raised the loans of Rs 1,300 crore from the open market.

The state lost a Rs 700 crore grant from central government because of administrative laxity. The state assembly passed the Fiscal Management and Responsibility Act (FMRA) last year itself but it took almost a year for the finance department to frame the rules. The center had announced trhat it will give grants to those states who pass the FMRA as center wants to encourage the states who undertake financial reforms.

Last but not the least Patil will also have to adress the issue of inability of various departments to spend the money on developmental projects. The figures of some ministries are eloquent enough to high light this point. The provision for public works ministry in 2005-06 budget was Rs 1,119.43 crore but till end of the January this department managed to spend Rs 363.37 crore only.

The urban development ministry which is headed by the chief minister Vilasrao Deshmukh himself had a budget of Rs 1,051 crore and the ministry managed to spend only Rs 827.79 and these include Rs 435.41 crore , given by the ministry as grant to various municipal corporations and councils.