Debt-ridden state to cut expenditure by 35%

Jan 24, 2013, 07:18 IST | Ravikiran Deshmukh

The government expects to save Rs 22,000 cr at the cost of development

The ongoing financial crisis, coupled with the draught-like situation in the state, has finally taken its toll on the overall spending by the state government on development works. Faced with a grave financial situation, the Democratic Front (DF) government has decided to cut its expenditure by 35 per cent for the current financial year of 2012-13.

As state decides to cut down on spendings, development works such as roads, bridges, power, water resources and infrastructure will take a back seat. Representation pic

The cut will materialise into saving of Rs 22,000 crore, say government sources. The state has decided to apply 15 per cent cut on planned expenditure, which is Rs 45,000 crore and 20 per cent cut on the non-planned expenditure that is approximately Rs 1.10 lakh crore.

While the planned expenditure comprises spending on development works such as roads, bridges, power, water resources and infrastructure, the non-planned expenditure includes salaries, pension, allowances and travel cost of the government employees and ministers, expenses on vehicles, fuel, maintenance of government buildings and properties, repayment of loans and interest on it.

The finance and planning department, headed by Deputy Chief Minister Ajit Pawar, has communicated the order to the other departments. The decision to apply a cut on planned expenditure will severely affect ongoing development projects, said a senior functionary of the DF government.

The Public Works Department (PWD) alone has been informed that it will not get the Rs 1,700 crore promised in the annual budget, which is certain to hit works such as construction of roads and bridges, said sources from the department.

For the first time in recent years, the state has decided to apply a cut on non-planned expenditure that will affect the upkeep of government offices, vehicles used by staffers from various departments, including the police department.

In short, the non-planned expenditure cut is to keep the state machinery going. Such a cut will have a serious impact on delivery of government services, said a government officer. He added that the state had no choice but to apply such massive cuts as the union government has not heeded to its demand to raise Rs 10,000 crore in loans from the market. Efforts by Chief Minister Prithviraj Chavan to convince Union Finance Minister P Chidambaram have proved unsuccessful, said a senior bureaucrat.

Money matters
State’s annual planned expenditure: Rs 45,000 cr
Non-planned expenditure: Rs 1.10 lakh cr
Debt (approx): Rs 2.50 lakh cr 

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