Cash-strapped government eyes Maharashtra land to mobilise additional revenue

Faced with a widening fiscal gap, the Maharashtra government is considering selling off some family silver to mobilise additional revenue. The plan is to monetise the value of lands in government possession by developing them on a public-private partnership (PPP) basis. Only a fortnight back, the government had raised the tax slabs to generate an additional Rs 1,600 crore to the exchequer.

"We have been unable to generate the necessary revenues ...hence looking at taking new measures," a senior government source told dna. "One way of doing this without levying or increasing taxes is developing government land on PPP basis," he said adding that this would mean creation of commercial hubs like the Bandra Kurla Complex.

Finance minister Sudhir Mungantiwar had held a meeting with officials recently to discuss ways to mobilise additional revenues.

The source said the government is aiming at giving a boost to long-pending projects, including those in Mumbai like the redevelopment of the BDD chawls and the Bandra government colony. This will make premium on FSI or housing stock available to the government. The government is also looking at expediting works on Wadala truck terminal and development of the MMRDA's land bank. The MMRDA has a total of 139.98 hectares in Wadala of which around 40 hectares is available for revenue generation.

"This will help monetise the value of these lands and generate revenues ...It can be used to meet our demand for funds and finance infrastructure projects. We are also identifying vacant lands which can be developed," he said. The source also admitted that though revenue mobilising measures – like allowing additional FSI with premium in the limits of municipal corporations and municipal councils – were initiated, the measures were not suffice to meet the needs.

Maharashtra is already groaning under Rs 3.38 lakh crore loans and borrowings and the interest servicing burden amounts to an annual Rs 27,000 crore. VAT collections, which are the state's largest source of revenue, have been hit by the fall in fuel prices. Tax earnings per litre on diesel dropped to Rs 9.58 in September from Rs 13.01 a year back. In the case of petrol the drop was Rs 2.11 per litre. The state is taking a hit of around Rs 1,800 crore, i.e. Rs 300 crore per month, on this count.

The state government has also committed itself to spending Rs 3,332.57 crore on measures including compensation for crop loss, crop insurance, interest waivers and seeds at affordable prices to farmers in 14 districts. This is in addition to the Rs 4,210 crore to be spent on scrapping local body tax (LBT) and devolving stamp duty collections to local bodies to make up for the loss and Rs 799 crore to shut down 12 toll projects and waive off toll on cars at 53 toll nakas.

The state cabinet, only recently, had increased the VAT on liquor, cigarettes, soft-drinks, gold, diamonds and ornaments by 5%. It also scrapped the LBT on petrol and diesel across the board in 25 municipal corporations (except Mumbai where LBT is not in force) but levied an additional surcharge of Rs 2 per litre on them.

According to the 14th Finance Commission recommendations, Maharashtra's share in de-voluble central taxes has been hiked from 5.199 % to 5.521% with grant-in-aid for rural and urban local bodies also being hiked. However, this has been met with a decrease in the Centre's contribution in social sector schemes like Sarva Shiksha Abhiyaan (SSA), National Health Mission (NHM), Rashtriya Krushi Vikas Yojana (RKVY), putting more burden on the state.