Maha seeks open market borrowings of Rs 7,800 crore

Written by Sanjay Jog | Mumbai | Updated: Feb 19 2009, 04:44am hrs
The cash-strapped state of Maharashtra, which has made populist announcements of the implementation of the Sixth Pay Commission report (with an outgo of Rs 8,190 crore) and additional farm loan waiver (by shelling out Rs 6,300 crore), has sought Prime Minister Manmohan Singhs intervention for the allocation of additional open market borrowings (OMB) of Rs 7,800 crore in lieu of the shortfall in entitlement of small savings collection of loans from National Small Savings Fund (NSSF).

The state government brought to the PMs notice that the RBI has constituted a technical group to look at various options available so as to make good the projected shortfall. According to the state, the best option available is the additional allocation of OMB to the tune of Rs 7,806 crore to meet the shortfall in the resources and implementation of various schemes under the Plan.

State finance minister Dilip Walse Patil in his communication to the PM said the Planning Commission had approved Rs 25,000 crore Plan for Maharashtra in 2008-09. The resources approved for the purpose inter alia incorporated a total loan component of Rs 13,905.43 crore. This translated into a fiscal deficit of 1.8% of the gross state domestic product (GSDP) and it is well within the target of 3% set in the fiscal responsibility and the budget management act of Maharashtra.

Walse Patil said out of the borrowing requirement of Rs 13,905.43 crore, loans from the NNSF were to contribute Rs 8,306.73 crore. It would appear total loans from the NSSF cannot exceed Rs 500 crore. Hence there is going to be a huge shortfall of Rs 7,806.73 crore in the total resources available for the Plan.

Though the liquidity position of the state government is presently somewhat comfortable, this will be adversely affected as Plan expenditure picks up in the remaining period and also because of the likely impact of the Sixth Pay Commission award on salaries of state government employees, he added.