State on verge of bankruptcy
The state, once known as one of the most progressive in the country, with a vibrant economy and healthy growth curve, is today on the brink of a financial collapse.
The state desperately needs fresh loans to survive.
Confusion prevails at the state administrative level amid reports of officials of the state revenue department handing back their official vehicles as they are unable to purchase diesel because of non-clearance of pending bills.
It is said that the state may soon borrow Rs 8,000 crore from the open market. Necessary permission from the Reserve Bank of India has been sought, said insiders who are in the know of the developments.
Revenue officials in many districts have started depositing their vehicles with the authorities as petrol pumps have stopped diesel supplies till pending dues are cleared.
“The situation is alarming and in many districts our officials have taken the step (of depositing vehicles),” said B D Shinde, an advisor of the Maharashtra Revenue Officials Organisation, of which he was formerly the president. “We raised this issue with Chief Minister Prithviraj Chavan on Sunday, December 2, during our annual convention at Pune.”
Shinde said the CM assured them of early release of funds.
“The outstanding towards fuel expenses is mainly due to the elections to local bodies being held in phases since January this year,” he said.
“The election-related work has been adding it up.”
From April 1 to October 31, the state raised Rs 7,579.37 crore by going further into debt. The rate of interest for the sum ranges from 8.84 to 13.75 per cent.
“The fresh loan is required to meet fresh demands from various departments, which include expenditure under the tag of non-planned,” said an official, speaking on the condition of anonymity.
Non-planned expenditure means expenses towards salary, allowances, pension, repair and maintenance of government properties, vehicles, debt servicing and payment of interest.
These expenses alone consume 81 per cent of the state’s annual revenue income, which is about Rs 1.60 lakh crore.
The total debt till October stood at Rs 2.31 lakh crore and is all set to go up to Rs 2.70 lakh crore by the end of the financial year on March 31, 2013.
Just for the annual re-payment of loans, the state needs Rs 13,609 crore till March. Of this, Rs 3,228 crore is for payment towards the principal and Rs 10,381 crore towards the interest.
“This money will have to be raised by borrowing from the open market,” said Leader of the Opposition Eknath Khadse, who sought information on the state’s economic health from the finance department.
The information given to Khadse by principal secretary Sudhirkumar Srivastava reveals the state till October had a total loan burden of Rs 2.31 lakh crore, of which Rs 1.90 lakh crore was internal loans and Rs 41,276 crore was under the head of other commitments.
Till October 31 in the current financial year, the state repaid Rs 12,076 crore towards debt servicing.
According to the current financial scenario, the state has just Rs 49,715 crore available for development-related expenditure, which is just 19 per cent of the state revenue income and is insufficient.
As per norms, the state should spend 60 per cent of its income on the development plan and 40 per cent on non-plan heads.
“The current scenario is alarming,” said Khadse, who served as finance minister during the Shiv Sena-BJP government.
In 1995, when the saffron alliance came to power, the state debt burden stood at Rs 16,000 crore.
“In 1999, when we lost the elections, the burden was Rs 44,000 crore. But the Congress-NCP government has since 1999 raised it to Rs 2.26 lakh crore,” said Khadse.
Rs 2.31 lakh cr
The total debt till October
Rs 13,609 cr
The amount the state needs for repayment of loans