Former Finance Secretary Vijay Kelkar to head Maharashtra panel on sustainable public finances

CM Devendra Fadnavis has announced the formation of the Maharashtra Sustainable Public Finance Committee, a high-level panel aimed at strengthening the state’s finances and supporting its long-term economic growth plans. FILE PIC

Maharashtra Chief Minister Devendra Fadnavis has announced the formation of the Maharashtra Sustainable Public Finance Committee, a high-level panel aimed at strengthening the state's finances and supporting its long-term economic growth plans, news agency IANS reported.

The committee will be headed by economist and former Union Finance Secretary Dr Vijay Kelkar. Announced on Wednesday evening, the panel will recommend measures to ensure sustainable growth in the state's tax and non-tax revenues.

The move is part of the Maharashtra government's ‘Viksit Maharashtra at 2047' vision document, which sets targets of expanding the state's economy to USD 1 trillion by 2030 and USD 5 trillion by 2047, coinciding with 100 years of India's Independence.

Focus on revenues and tax reforms

The Kelkar panel has been asked to suggest ways to modernise Maharashtra's tax system and address revenue leakages. It will also examine the rationalisation of tax rates, fees and exemptions.

Another key area will be identifying untapped sources of revenue and improving returns from public assets and state-owned enterprises.

The committee will also examine public expenditure and suggest ways to streamline spending while accommodating rising committed expenses, including salaries, pensions, interest payments and welfare schemes.

It will further work on a fiscally responsible strategy to reduce the state's dependence on borrowings for infrastructure projects and to finance budget deficits.

Panel brings together economists and former officials

The committee includes Prof Karthik Muralidharan, founder-director of CEGIS; Dr Nitin Kareer, former Chief Secretary of Maharashtra; T Rabi Sankar, former Deputy Governor of the Reserve Bank of India; and Dr Ashima Goyal, President of The Indian Econometric Society.

The panel has been constituted as Maharashtra pursues an investment-driven growth strategy across infrastructure, human resource development, water security, urban management and energy transition.

At the same time, the state is facing increasing fiscal pressures, with welfare commitments and debt servicing costs adding to expenditure requirements.

Government seeks to manage borrowing

The state's vision document has proposed changes to government expenditure policy to support long-term capital formation. It has also called for alternative financing mechanisms and greater private capital participation.

Maharashtra's fiscal deficit targets are set within the limits prescribed under the Fiscal Responsibility and Budget Management framework. The state is targeting a fiscal deficit of 2.8 per cent to 3 per cent of GSDP, while seeking to keep the revenue deficit below 0.7 per cent of GSDP.

Progress on the vision document is monitored every quarter through a dedicated Vision Management Unit chaired by the chief minister.

However, meeting FRBM targets has become difficult amid higher welfare spending and debt servicing obligations. The government has consequently relied on market borrowings to fund capital projects and manage short-term liquidity requirements.

The newly constituted Kelkar Committee is expected to recommend structural measures aimed at improving Maharashtra's fiscal position and ensuring long-term financial sustainability.

(With inputs from IANS)