Maharashtra needs to do more to curtail spending

The cash-strapped Maharashtra government has put a freeze on recruitment, barring some departments/ corporations that have their own money to sustain growing impact. We saw it coming when a white paper on the state’s financial condition was placed in the state legislature’s budget session in April this year. Expenditure on salary and pension of government employees constitute the largest chunk of the state’s outgoings. The white paper said, “We need to establish a revenue balance and the best way to do it is to control salary and pension expenditure.”

The decision was hard to make because of its political ramifications, say the BJP government mandarins, but they insist that it was needed to bring in fiscal prudence to the state budgeting, which has been losing credibility because of mismatched projections and actual expenditure. The state has been witnessing a huge gap of 14-21 per cent between the presented budget and the actual expenses.

The BJP government’s first budget, which was presented recently, could prove no different if things don’t change. Will the change be seen in the next 10 months? Experts do not think so, because of the tricky state of affairs of the state government’s coffers.

Many believe freezing jobs cannot be the only way to curtail expenditure. The white paper has discussed some other measures, but sensing that it would not be as easy to implement them, has taken the quicker route of denying jobs to the youth. The promptness is also traced to a dire need of money for mitigating the drought situation in the state, which will aggravate further if the monsoons fail this year as well. The new government has announced many developmental schemes, some of which have already taken off and need consistent flow of funds.

This year, salary and salary grants will need Rs 73,000 crore, and another Rs 20,000 crore would go towards pension of retired employees. This expenditure has been increasing by 14 per cent each year, even as the state’s debt burden is more than Rs 3.33 lakh crore. Pension payment, for instance, present a curious case in Mumbai’s civic body, where serving employees are less than the retired lot. As per data till January 2015, BMC had 1.09 lakh employees in service who were paid R383 crore in salaries, while it paid Rs 123 crore in pensions to 1.22 lakh retired employees.

Such patterns have been leaving a mere 15-20 per cent of the budgeted money for capital expenditure, which is expected to offer returns to the state and secure its future. This is the reason why many big projects are still incomplete. Though the state has spent a significant amount of money on such projects, the inordinate delays have not created any asset for the state.

Think different
The government claims that the added expenditure has been taking a toll on its financial condition. The BJP government has blamed the 15-year Congress-NCP rule for the mess, and it may want a pat on the back for taking a decision that has robbed it of its political mileage. The youth, who expect the government to create jobs, would like the decision reversed as early as possible.

What successive governments have failed in doing is departing from traditional ways despite being in a financial mess over the past many years. They took pride in saying they were still “better off” as compared to other states. However, it’s time the new government changed its planning methodology. It needs to ensure that only the works that are necessary are given funds, and they are also executed properly. Another crucial measure will be to plug leakages in the concessions offered by the state. The authorities must establish a direct contact with the beneficiaries.

Increasing tax collections without increasing taxes should be the top agenda. For this, the government needs to bring in more reforms that prevent corruption in these sectors. Tax evasion is still rampant because of faulty assessments and weak enforcements.

Above all, the government the Cabinet, bureaucrats and all others who avail of perks bought with taxpayers’ money must follow austerity measures instead of preaching the same to others.

The writer is Political Editor of mid-day

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