Mumbai: Although Maharashtra Chief Minister Uddhav Thackeray and the Finance Minister Ajit Pawar may have been forced to take U-turn from their own decision to impose salary cut for government employees and elected representatives, it has set off alarm bells ringing that the financial condition of debt-ridden Maharashtra is not good. The lockdown has increased the gap between outlay and the revenues receipts in the state exchequer.
The state, through a notification on Tuesday, argued that due to lockdown and industries are shut the state’s revenue income has decreased. All government offices are operating with a meager five per cent staff. After determining the monetary constraints of the state at the end of the financial year, there is a need to cut down some expenditures and the need to delay some plan outlays.
The notification further stated that ahead of the crisis, it has decided to pay the salary of the month March (paid in April) of the government employees and elected representatives in two installments. However, there is no clarification on when the second installment of March salary will be paid. ‘It will be informed separately about payment of the second installments of the salary,” the notification has clarified.
The notification created confusion amongst the employees and MLAs and within an hour, first FM Ajit Pawar and later CM Thackeray explained that the salary will not be cut down, but will be paid in two phases.
CM Uddhav Thackeray had written a letter to the Centre on December 12, 2019, asking to release state’s legitimate dues of Rs 15,558.05 crore including Goods and Services Tax (GST) compensation up to November 2019. Thackeray in his letter had expressed concern that due to economic slowdown, there would be a shortfall in GST collection as compared to benchmark growth of 14 per cent. The state has not yet received Rs 8,611.76 crore as GST compensation till November 2019.
After imposing of GST across the nation, state do not have any authority or right to levy any new tax, or increase/decrease in any taxes. The major revenue resource of the state is its share of Central Goods and Services Tax (CGST) and GST. However, it has shown negative growth in the financial year 2019-2020.
On one hand, Bharatiya Janata Party’s (BJP) Chief Minister Yogi Adityanath led Uttar Pradesh government and the Kerala governments have decided to transfer the relief amounts into the bank accounts of labourers and migrant workers and have made special provision and released fund from the budget, Maharashtra is waiting for financial support from the Centre. Ajit Pawar has urged Prime Minister Narendra Modi to make provision of Rs 25,000 crore for Maharashtra to fight against the Coronavirus.
In the budget presented by Finance Minister Ajit Pawar in the state assembly on March 6, last month, stated that the total debt over state exchequer is Rs. 5,20,737 crore. According to estimates Maharashtra will need Rs 1,17473 crore to pay salary to its employees. This workforce includes its direct employees, employees from state-run corporations, teachers, Zilla Parishad and other local body employees. This amount is 33.81 per cent of the total annual expenditure of the state.
State will have to pay Rs. 38,467 crore to pensioners, which amounts to 11.07 per cent of the total expenditure. The annual budget had estimated the revenue earnings of Rs. 3,47,457 crore from various resources. Whereas, it expected revenue expenditure of Rs. 3,56,968 crore. Total 55.11 per cent share from the revenue spent on salary, pension and interest.
MahaVikas Aghadi government had made an outlay of Rs 22,000 crore in the budget to make farmers debt-free under Mahatma Jyotirao Phule Karjmukti Yojna-2019.
According to experts, after lockdown, every enterprise will face an economic reversal, which ultimately will affect revenue receipts of the state. Mahesh Tapase, a businessman and economics expert, argues that Investor, Industry and Consumer are the three major factors which relate to economic growth and also to the economic slowdown.
“Coronavirus is not only an health-related epidemic but also an economic pandemic which has influenced the whole world. China is the biggest manufacturing hub. It needs market. The trade war between the United States of America (USA) and China has thrown the world into a crisis. The OPEC countries (Organisation of Oil Producer and Exporters Countries) are already finished economically due to the Gulf war. Now, Covid-19 has drawn the whole world into an economic crisis,” said Tapase.
Tapase, who is also the spokesperson of Nationalist Congress Party further said, “Investor, Industry and Consumers are the three major components which drive the economy. At this scene, the investor has no budget to infuse in the enterprise. Industry has no credit to the banks or banks are not ready to lend money in the industry and there is no money in the pocket of the customer to purchase products. The Coronavirus pandemic has finished all these three components and hence, it will have an adverse impact on the Indian economy.” Tapase claimed that Maharashtra will need at least three years to come out from the economic crisis.
Sudhir Mungantiwar, the former finance minister said that there is a need to formulate a long term plan to face the fallout of the Coronavirus issue as well as to tackle the possible economic crisis.
“As of today, the government is preparing strategies based upon difficulties originate on the day. It is not planning assessing the possibility if the lockdown period will be extended or the number of patients will be intensified in huge number,” said Mungantiwar. He added that at this phase, the number of patients is increasing in multiples and not in doubles. In this crisis, the state should make provision of additional beds in hospital, additional testing labs, if need be, the state has to acquire hotels to accommodate patients.
Mungantiwar further said that Maharashtra is the largest state and it should make outlay from its own pocket like Uttar Pradesh and Kerala. “Maharashtra will need to take big decisions like to use deposits of some institutions like BrihanMumbai Municipal Corporation (BMC). The BMC has Rs 60,000 crore deposits in banks,” said Mungantiwar.
The Bharatiya Janata Party leader further said, apart from preparation on medical treatment, the state should concentrate on the prospective plan about how to survive the financial crisis situation. “State should constitute a panel which will review states financial concerns and will plan to improve the financial resources,” he said.
How the salary will be paid by the government – Public representatives including the Chief Minister, Leader of Opposition, Chairman of Upper House and Speaker of Lower House, Members of Legislative Assembly (MLAs) and Council members (MLCs), Member of Parliament, elected members of local body authorities including Municipal Corporation, Municipal Council, Zilla Parishad and Panchayat Samiti will get 40 per cent salary In the first phase and remaining 60 per cent later in the second phase.
