Mumbai: Battling to contain coronavirus in the state, Maharashtra has declared a freeze on new capital works till March next year. The western state imposed a 67% cut in development (scheme) spend for 2020-21 — said to be the deepest ever slash in expenditure since the state was formed in 1960.
According to a report in Indian Express, the state (worst-hit by the pandemic in the country) on Monday ordered departments to withhold tenders for new purchases and approvals for new development works. To ensure continuity in administration during the outbreak, it has also put a stop on all departmental transfers. The government has only allowed procurements of infrastructure and items required for combating the pandemic.
Less than two months back, the Shiv Sena-NCP-Congress government had presented a Rs 4.34 lakh crore budget for 2020-21, an increase of 4.1 per cent over the revised estimate for 2019-20. The only other state with a bigger budget than Maharashtra is Uttar Pradesh.
The report stated that the capital outlay (spending which leads to asset creation) was estimated at Rs 45,124 crore for this year, 2.6 per cent lower than in 2019-20.
As the country entered its third phase of the nationwide lockdown, Maharasthra's Finance Department estimated its own loss in tax revenues of about Rs 50,000 crore. For the current financial year, the state's own tax revenues were budgeted at Rs 2,25,071 crore.
The report quoted senior officials as saying that the losses were only likely to increase further.
Besides the 67 per cent cut in scheme expenditure, the state has also frozen fresh recruitment till further orders.
"Department secretaries have been asked to review all ongoing schemes. Only those that are unavoidable will be taken up on priority. Some others will be stayed. Others that can be avoided will be cancelled," a senior official was quoted as saying.
For Centrally-sponsored schemes (CSS), departments have been asked to sit for a collective review with the finance department. "Cuts in expenditure on CSS would depend on the amount of the state's share and also the scheme’s overall importance," the order stated. Departments have also been barred from releasing funds to loss-making corporations for now.
Further, departments have been asked to cap administrative expenses at 75 per cent of the budgeted amount, with restrictions announced for expenditure on office renovation, stationery, consultancies, and rents among others. Departments have been asked to prioritise spending on committed non-developmental liabilities, including salaries, wages, pensions, and servicing of debt.
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