According to Maharashtras economic survey, which was tabled in the state legislature on Monday, growing interest burdens, huge off-budget borrowings, poor recovery from public services, large investment projects and subsidies under the loss-making cotton monopoly procurement scheme and other services are responsible for the budgetary imbalance. Also, the diminishing kitty of the devolution of taxes by the Centre has contributed to the deterioration of fiscal imbalance in the state. However, gross state domestic product (GSDP) at constant prices (1993-94) is expected to grow at 6.9%, while at current prices it would increase at 13.8% during 2004-05.
The survey has expressed concern over the growing indebtedness of the state government. Overall debt of the state, which was at Rs 15,354 crore (13.5% of GSDP) in 1993-04 increased to Rs 50,319 crore (21.1% of GSDP) in 2000-01 and to Rs 83,154 crore in 2003-04. "The increasing revenue deficit and the higher fiscal deficit have led to a spiralling debt. Hence, a vicious cycle of deficit, debt service burden has emerged. To reduce debt burden, the state government has asked for Centres permission to replace old high cost debts with less expensive borrowings through the debt swap scheme," the survey noted.
The survey has reiterated the state government needs to pursue the passage of the Fiscal Responsibility Bill during the ongoing budget session. It is required to fulfil the necessary condition of annual cut of 5% in the ratio of revenue expenditure to revenue receipts to become eligible for special structural adjustment loan (SAL) from the World Bank. The state has already sought SAL of Rs 10,000 crore.
During 2004-05, foodgrains production is expected to be at 107.5 lakh tonne, 5% more than that in 2003-04. However, cotton production would be less by 3.1% at 5.08 lakh tonne. The oilseeds production would rise by 2.6% to 29.1 lakh tonne. The sugarcane production is expected to be much less at 204 lakh tonne, 24.5% less than the previous year.
Maharashtras industrial production (manufacturing) in the first nine months has registered a growth of about 8.2% compared to 7.8% for the entire year of 2003-04. Despite the fiscal crisis, Maharashtra continues to be the most favoured destination for investors as till the end of August 2004, under foreign direct investment, 3,655 projects with an investment of Rs 52,092 crore have been approved by the Centre.
The survey has mentioned the ailing Maharashtra State Electricity Board will be divided into four companies -- holding company, generation, state transmission utility and distribution by June 10, as per the Electricity Act, 2003.