State debt to shoot up after 95,000 crore supplementary demand

MUMBAI: The state’s debt which is projected at a steep Rs 7.8 lakh crores is set for a hike after deputy chief minister Ajit Pawar tabled supplementary budgetary demands of Rs 94,889 crores in the state assembly on Tuesday. This is the highest ever demand in the state. It follows a budget which showered massive sops on voters with an eye on assembly polls due in October.
had reported on June 30 that the supplementary demands would be almost Rs 1 lakh crore.
“The state is fooling the public. It has shifted a massive chunk of its budget expenses into the supplementary demands. This was done to keep the debt figure lower than it really is in the budget,” said NCP (Sharad Pawar group) leader Jayant Patil, who has earlier been finance minister.
The budget is meant to allocate funds for the main schemes and expenses of the government. Supplementary demands are meant for sudden, additional expenses that arise beyond the budget.
The norm is that the three supplementary demands made in the year should be limited to 10% of the size of the budget. However, this single supplementary is 17% of the size of the budget which is 6.1 lakh crore. Last year, the state’s three supplementary demands taken together amounted to Rs 1 lakh crore.
The immediate consequence will be a rise in the revenue deficit projected at Rs 20,051 crores and the debt. “The revenue deficit will now rise to Rs 1.1 lakh crore. The fiscal deficit will be over 4% of GSDP when the limit is 3%. The result is the state’s credit rating will fall and it will be difficult to raise money. It will be charged a very high rate of interest,” said Patil in the state assembly. He also said the state would find it tough to pay employee salaries.
Meanwhile finance minister Ajit Pawar said the Opposition should not malign the state’s image. “Fiscal discipline has been maintained. The Opposition should not scare investors,” said Pawar. He said the net burden of the supplementary demands would be Rs 88,770 crores.
The Mukhya Mantri Ladki Bahin Yojana announced in the budget has claimed over a quarter of the supplementary demands. A chunk of Rs 25,000 has been allocated to the scheme which will provide a subsidy of Rs 1500 per month to underprivileged women.
A sum of Rs 2,265 crores has been allocated to cooperative sugar factories for margin loans. The state’s sugar barons are mainly politicians who hold sway in Western Maharashtra and Marathwada. In the demands, Rs 5,555 crore has been allocated to the apprenticeship scheme for youth and for job fairs. Another Rs 2,930 crore has been provided for a free power scheme for farmers with agricultural pumps of upto 7.5 horse power. And Rs 1,009 crores for a scholarship scheme for the higher education of EWS girls.