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Maharashtra Budget 2018 | Maharashtra challenge: Contain rising deficits & public debt

Crop loan waiver to impact credit discipline among borrowers

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State Finance Min Sudhir Mungantiwar and MoS for Finance Deepak Kesarkar present the Budget
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Increasing revenue and fiscal deficits and burgeoning debt stock pose a serious challenge to the BJP-led government of making available enough funds for the implementation of a slew of development and welfare projects. Experts believe that crop loan waiver in particular will affect state fiscal and impact the credit discipline among borrowers.

Since the party led government took over in October 2014, the government has had to struggle to contain revenue deficit which was Rs 12,138 crore in 2014-15, which reduced to Rs 5,338 crore in 2015-16 and Rs 8,536 crore in 2016-17.

However, the revenue deficit surged again to Rs 14,843 crore in 2017-18 against the budget estimate of Rs 4,511 crore, which was estimated at Rs 15,375 crore in 2018-19. The rising revenue deficit will leave a limited headroom for the government to shell out funds, especially for populist schemes and incur on capital expenditure ahead of the next Assembly election slated for 2019.

Fiscal deficit has been on the upward spiral, too. The state had a fiscal deficit of Rs 31,827 crore, which was 1.79 per cent of the gross state domestic product (GSDP) in 2014-15, Rs 28,381 crore (1.43 per cent) in 2015-16, Rs 38,616 crore (1.71 per cent) in 2016-17, Rs 46,201 crore (1.85 per cent) in 2017-18 and Rs 50,586 crore (1.81 per cent) in 2018-19.

Even though both revenue and fiscal deficits are way below 3% of the GSDP they may cross the increase considering government's commitment to implement crop loan waiver scheme (Rs 32,000 crore), 7th Pay Commission report to its 17 lakh employees (Rs 21,000 crore) and financial assistance to farmers and other sectors.

Furthermore, the rising public debt is also putting pressure on the state finances. Maharashtra had a public debt of Rs 2.94 lakh crore (16.52 per cent of GSDP) in 2014-15, Rs 3.24 lakh crore (16.32 per cent) in 2015-16, Rs 3.64 lakh crore (16.16 per cent) in 2016-17, Rs 4.06 lakh crore (16.30 per cent) in 2017-18 and Rs 4.61 lakh crore (16.52 per cent) in 2018-19.

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