The financial situation of Maharashtra would be back on the fast track of growth within the next three years with the passage of the medium term fiscal reforms programme (MTFRP), according to V Ranganathan, chief secretary of Maharashtra.
"The fact is that all states in India are currently reeling under a financial crisis. What is needed is a fundamental improvement in the system, which we believe the MTFRP will achieve. We hope to achieve a revenue budget surplus, bring the ratio of the state's debt to its gross domestic product under control, and reduce the fiscal deficit to controllable levels in this three year period," Ranganathan said.
He, however, added that these steps would have to be complemented by Central government initiatives.
"We have not factored in any Union government initiatives while making our projections for Maharashtra's fiscal turnaround in three years under the MTFRP," Ranganathan added.
Another issue that the state government has taken up with the Union finance ministry is the huge difference in the average cost of borrowings for states, as against cost of borrowings for the Centre.
"As far as World Bank loans are concerned, the average cost of borrowing for the state governments is 3.3 per cent higher than that for the central government. The Government of India is the largest borrower in the country, and avails of the lowest interest rates. We are seeking a passing down of this benefit," he said.
World Bank loans are routed to state government projects through the Union government.
The Maharashtra government has submitted a proposal to the Centre seeking approval to refinance Rs 10,000 crore worth of high-cost debt raised under a higher interest regime (14 to 15 per cent) with open market borrowings that attract a sub-eight per cent interest rate.
Regarding the drought situation in Maharashtra, Ranganathan said he was optimistic that the current spell of heavy showers, although delayed, would marginalise the impact of the dry spell witnessed until around four days back.
"Rains have been registered in all regions of the state, and this is a very positive development. This should marginalise the effect of the lack of rains in July," he said.
On the large scale closure of factories and other industrial units across the state, Ranganathan said: "Under the impact of the World Trade Organisation (WTO) agreement imported goods have flooded the Indian market, and the local industry is yet to come to terms with this. However, if employment is taken as a benchmark of industrial progress, then it has only grown, be it in the service sector or allied industries."
