Maharashtra finance minister Ajit Pawar, who would present his second Budget tomorrow, faces several challenges in the wake of mounting debt and rising spending on salary, wages, pensions, interest payment and subsidies.
Pawar has already indicated he may introduce more taxes. These are expected to impact the higher income groups, as well as liquor, cigarettes, transactions in capital markets and property deals.
Maharashtra needs at least Rs 80,000 crore for the completion of irrigation projects. It is also implementing a Rs 60,000-crore plan in the power sector to increase generation and upgrade transmission and distribution systems. The government would also have to allocate funds for relief in scarcity-hit districts.
The government presented a Rs 56-crore revenue surplus Budget for 2011-12. It has already announced a Rs 2,000-crore package for cotton growers and given Rs 800 crore to subsidise power rates, especially of agriculture and powerlooms.
Further, a state government official, who did not want to be identified, told Business Standard: “The rising percentage of salary, wages and pension to revenue receipts is a matter of concern. It had shot up to 48.5 per cent in 2009-10 from 37.9 per cent in 2008-09. It is expected to increase further to 51.1 per cent in 2010-11 (revised estimates). In 2011-12, this is likely to fall to 49.5 per cent. Interest payment is also increasing due to rising debt stock at Rs 2,26,926 crore (19.2 per cent of gross state domestic product) in 2011-12 compared to Rs 2,05,689 crore in 2010-11. The government’s interest payment increased to Rs 18,049 crore in 2011-12 (Budget estimate) from Rs 11,983 crore in 2006-07.”
Though tax revenue is likely to more than double to Rs 97,404 crore in 2011-12 from Rs 46,122 crore 2006-07, there is a problem of non-realisation of tax worth Rs 27,320 crore.
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According to the economic survey 2011-12, presented last week, this amount had been raised but not realised till the end of 2009-10. Of the undisputed amount of Rs 9,247 crore, about Rs 4,110 crore has not been realised for more than four years.
Pawar needs to take measures to curb government guarantees, amounting to Rs 17,320 crore at the end of 2009-10. The major guarantees given were to the public works department cooperatives, marketing and textile departments, industry, energy and labour departments, water resources and water supply and sanitation department.