Mumbai: He is not only a finance expert but has authored books on how to look over annual expenditure which is popularly known as a budget. He has given several lectures on how to figure out budgets in simple language. He is none-other than Devendra Fadnavis, Finance Minister of Shiv Sena (Shinde faction) – BJP alliance government. He will present an annual budget for the first time as the FM on March 9, 2023, in the ongoing session of the Maharashtra State Legislature.
The budget session will begin from February 27, in Mumbai. Fadnavis has never been the Finance Minister. The General Election is scheduled to be held in April next year. The budget that will be presented in the election year which means in March 2024 will be interim and the additional budget will be proposed by the new government in June-July of the next year. That means Fadnavis will present the poll budget on March 9.
While presenting his first budget, Fadnavis has the challenges to maintain a balance between providing allocations for development projects as well as looking out for new sources of revenue. As the GST council has stopped reimbursing states from June last year, there is a shortfall of around Rs 10,000 crore to the state exchequer.
The state has only four to five major sources of revenue generation including stamp and registration fees, state excise, taxes on sale and trade, taxes on vehicles, land revenue taxes, and taxes and duties on electricity.
According to a senior bureaucrat who worked in the finance department, at this moment, the finance minister has restrictions on raising any tax duty. FM cannot propose to increase stamp duty as it will directly affect the middle-class sector from those major chunks of stamp duty collected in the state exchequer through the selling and buying of flats.
“The construction sector is going through a bad patch. Thousands of flats in newly constructed buildings remained vacant after covid pandemic. So, the state has no choice other than to support the housing sector by maintaining Ready Reckoner Rate (RR) constant without making any change and ultimately no change in stamp duty,” said an expert in the construction business.
The bureaucrat pointed out that in states other than Maharashtra, there is no difference in tax regime between country liquor (CL) and Indian Foreign Liquor (IFL). The excise tax is the same for both CL and IFL, whereas in Maharashtra, taxes are very marginal for CL and very high for IFL. “If FM will bring these two items under the same excise regime, there are possibilities to get more revenue from excise,” said the senior IAS officer. Maharashtra collects around Rs 18,000 crores from excise duty.
The annual plan for the year 2022-2023 contemplates a development program of Rs. 1,50,000 crores. The annual plan for the year 2023-24 would be expected of Rs 2 lakh crores. Another official claimed that FM Devendra Fadnavis will have to please farmers as well as youths including a woman by creating more opportunities for employment generation for them. It will happen only when investment in industries and the service sector will be pitched by the state.
“For the last few years, there was no good alternative for investors -may it be foreign or domestic – other than Maharashtra to invest in. Now, Uttar Pradesh, Uttarakhand, and Tamil Nadu have emerged as a competitor for Maharashtra. It will be the skill of CM Eknath Shinde and DCM Devendra Fadnavis to create confidence in investors by introducing investment-friendly policies,” said an official from the industries department on condition of anonymity.
He added that it was a bad experience in the past when investors were threatened by some politicians and their supporters. That’s why they shifted their business from Maharashtra to other states. “Controlling on labour and Mathadi unions as well as local politicians is the big challenge before the CM-DCM duo to attract investment in Maharashtra and bring back golden days to our state,” he said. He pointed out that the parallel mechanism in the industries department should be finished which are the blots for the state.
Strengthening health infrastructure is the key priority of CM Shinde. It is expected to give more allocations to health departments apart from tribal. Before going to the general election, the next year, the Shinde-Fadnavis government has a plan to showcase the maximum infrastructure projects to be functional or complete maximum work. As of today, the state has borrowed funds to complete major projects and according to the same bureaucrat, the health of the state’s economy is in good condition to borrow more funds.
Fadnavis has appealed to people to give suggestions about how his budget should be. The finance ministry has received lots of ideas, of which a few good suggestions are expected to be included in the first budget of FM Devendra Fadnavis.