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Loan waiver, Rs 10 meals: Uddhav Thackeray govt’s CMP promises could burden state treasury

Hindustan Times, Mumbai | By
Nov 30, 2019 09:12 AM IST

A senior official said a conservative estimate for a loan waiver for farmers up to July 2019 would lead to a burden of Rs 30,000 crore.

From a complete loan waiver to Rs 10 thali, and Re 1 clinics in talukas, the Maharashtra Vikas Aghadi’s common minimum programme is aimed at farmers as well as citizens. However, the first hurdle in the delivery of many of these populist sops, starting with the waiver, for the Thackeray-led government is the current state of the public exchequer.

The Fadnavis-led government, in its last budget in July, had projected a revenue deficit of Rs 20,292 crore as well as an additional debt burden of Rs 77,196 crore this year to deliver on many commitments, including the earlier loan waiver. Revenue deficit occurs when the state’s revenue falls short of its expenditure. The 2019-20 budget estimated the total debt on the state would be Rs 4.71 lakh crore by the end of this fiscal. Nationalist Congress Party (NCP) spokesperson Nawab Malik, however, claimed a realistic reassessment of budget allocations shows the debt has actually touched Rs 6.5 lakh crore.

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A senior official said a conservative estimate for a loan waiver for farmers up to July 2019 would lead to a burden of Rs 30,000 crore. “The cabinet will have to meet and take a call on the loan waiver and its modalities. We are committed to it, but we first need to take a look at the state of the exchequer, its liabilities, etc.,” said NCP leader and minister Jayant Patil.

Besides the Seventh Pay Commission burden – annual burden of Rs 15,300 crore plus arrears – the current government will now have to account for relief for unseasonal rain and drought, infrastructure commitments made by the previous government, along with the promises they have made. (The Seventh Pay Commission arrears from 2016, amounting to roughly Rs 45,000 crore, are to be paid in three annual installments).

The state’s debt repayment and interest payment dues for this year stand at Rs 61,402 crore. “The debt of the state is within the fiscal norms, it is around 15.9% of the gross state domestic product. But we are already burdened by the Seventh Pay Commission payouts and first loan waiver. Anything else will come at a cost of development spending,” said a senior bureaucrat.

He added this government will have to assess the projects of the earlier regime they want to continue with and rejig their priorities. On Thursday, when the first cabinet meeting was held, and on Friday when the new chief minister took charge, the focus was on legislative procedures and trust vote, said the bureaucrat quoted above.

The earlier government had an ambitious infrastructure plan underway, which was being funded off the budget books through international loans and public undertakings namely the MMRDA, MSRDC, etc. The state has, however, given guarantees for a majority of the big-ticket projects. For the Mumbai-Nagpur highway, it had committed to a cash subsidy of Rs 6,000 crore; five agencies have also been asked to loan Rs 5,000 crore. The current dispensation is not keen on the bullet train project or the Mumbai-Nagpur expressway, so these projects may be kept on the backburner.

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