Mantralaya sources confirmed on Monday that the state has been on overdraft for the last three days, basically in view of dispersal of funds due to March ending. These sources told The Financial Express that the state, which would have to clear the overdraft within 10 working days, would soon overcome the situation. According to these sources, the state also had to draw overdraft because of the hike in expenditure, especially on education, health, and police administration. Simultaneously, the state had to make available Rs 800 crore through a supplementary budget towards the subsidy provided to the agricultural and powerloom consumers.

Furthermore, the state government's attempt to increase revenue and cut the fiscal deficit was also hampered as it had to convert the loan amount of Rs 1,986 crore, provided in the past to the Maharashtra State Electricity Board (MSEB), into a share capital. On top of it, the revenue collection has also been adversely affected due to the prevailing drought conditions in over 20,000 villages across the state.

State government sources said, "This is the third time since the DF government came into power in October 1999, that the government has drawn an overdraft." The DF government had drawn an overdraft of nearly Rs 650 crore in April 2000, and later of around Rs 50 crore in September-October last year.

These sources tried to downplay the overdraft situation on the grounds that "this is a routine affair, especially when the expenditure surpasses the revenue collection." State finance minister Jayant Patil took stock of the situation during an urgent meeting convened by him with senior officials. Mr Patil is believed to have discussed revenue collection vis-a-vis expenditure position prevailing in the state, especially against the backdrop of March ending. In addition to this, the state government had also resorted to draw ways and means advances in view of the dip in revenue collection. Although, the state's revenue has been increasing at 12.46 per cent, revenue expenditure has hiked at 14.98 per cent.