Maharashtra groans under financial burden

The flood relief commitment, special packages for Vidarbha cotton farmers to prevent suicides and for the development of backward Marathwada region and the likelihood of the state government employees being given dearness allowance (DA) on par with the central government staff are putting tremendous strain on the state's Rs 14,829-crore plan outlay.

After the floods, the government announced various relief measures that are likely to cost the exchequer around Rs 2,500 crore and loans for Vidarbha farmers at a concessional interest rate of 6 percent could also cost the state government around Rs 650 crore.

Besides this, a special developmental package was approved by the state cabinet recently for Marathwada.

On top of it, state government employees' unions are putting pressure on the government to increase dearness allowance from the present 24 per cent of the basic pay to 29 per cent.

Finance ministry mandarins believe that sooner or later the government will have to accept the demand. If that were to happen, an additional burden of Rs 70 crore per month would fall on the state exchequer.

Speaking with the Business Standard, a senior official from the finance ministry said, "The recent floods and these special packages which are not part of the budget have been wiped out our all projected revenue surplus of Rs 305 crore"

"If all government departments suddenly become extra efficient, then either we may be forced to cut budgetary allocations for some projects or go in for fresh borrowings."

Elaborating on his point, the official said, "Since many government departments don't even manage to spend the amount allocated for various projects taken up by them, the finance ministry could divert funds to these unexpected heads without slashing the provisions for projects or resorting to fresh borrowing".