MUMBAI: When the state cabinet cleared financial assistance to major infrastructure projects like the Thane-Borivli tunnel and the Orange Gate-Marine Drive tunnel earlier this week, it overruled serious concerns raised by the finance department about the state’s precarious financial condition.
The finance department said the state could not take on an additional liability because its fiscal deficit – gap between the govt’s revenue and expenditure – had doubled to almost Rs 2 lakh crore for 2024-25 and could not be filled, reports Priyanka Kakodkar.
It said the state faced a heavy financial burden owing, in part, to schemes introduced in the (pre-poll) budget of Mahayuti govt in July. “Given the state’s limited resources and debt and liabilities, ongoing projects as well as schemes proposed in the budget, the state faces a massive financial burden,” it added.
It pointed out that while the borrowing limit on states was 3% of GSDP, “the fiscal deficit is (now) beyond 3%”.
‘Pre-poll sops among reasons for massive financial burden’
Pre-poll sops announced by Mahayuti govt were among the reasons the state faced a massive financial burden, the finance department said while raising concerns about the precarious financial condition.
The finance department pointed out that under Article 293 (3) of the Constitution, the borrowing limit on states was 3% of GSDP. “The fiscal deficit is beyond 3% of the state’s GSDP and will not be possible to fill. Hence, in this financial year, it will not be possible to consent to taking on more financial liability,” it said. Fiscal deficit is the gap between the govt’s revenue and expenditure and is an indicator of the extent of borrowings.
The cabinet this week approved a Rs 1,354 crore interest-free subordinate loan from the state for the Orange Gate-Marine Drive tunnel and a similar loan of Rs 2,417 crore for the Thane-Borivli tunnel. In both cases, the finance department had advi sed against the funding. In the case of the Thane Circular Metro Rail project, the department warned that the liability for the Rs 4,514 crore loan for the project should not come onto the state govt.
While responding to the loan proposal for the Orange Gate-Marine Drive tunnel, the finance department said that in the state budget in July, the fiscal deficit estimate was Rs 1.1 lakh crore.
However, the govt introduced supplementary budgetary demands, worth around Rs 95,000 crore. As a result, the estimated fiscal deficit rose to Rs 2 lakh crore for 2024-25, which would not be possible to fill. The state could not bridge the deficit through its own revenue and tax collection, the finance department pointed out.
The department said the state could not take large loans for the project. If MMRDA took large external loans, it would have to repay these from its own revenue, the finance department said.
The Ladki Bahin Yojana alone places an annual burden of Rs 46,000 crore.
