With the drastic fall in tax revenue collections amid the pandemic and lockdown, the state government in April had to borrow ₹9,000 crore from the market for its fixed expenditure such as salaries. The state is expected to borrow the same amount in May too.
The state needs ₹20,000 crore to pay salaries, pension to its employees, interest on loans, establishment cost and incidental expenditure such as on Covid-19. The lockdown was announced in the last week of March. Against the mandatory recurring expenses of ₹20,000 crore a month, the state has been receiving only 45-50% since March. The expected revenue collection in March dropped by ₹26,100 crore, while it was ₹10,150 crore lower than estimated in April. A similar drop is expected in May too.
“Against the annual estimated tax revenue of ₹22,500 crore per month, we received ₹10,261 crore in April and expect ₹11,000 crore in May. The outstanding from the Centre towards the GST compensation is ₹5,040 crore for the past four months and ₹1,280 crore from the tax devolution for April is yet to be received. This forced us to borrow more from the open market last month. The trend is expected to continue for the next three to four months, even if the lockdown is lifted,” said an official from Mantralaya.
The official said the annual budgetary estimate for borrowing was ₹56,000 crore, mainly for development works, but the pandemic has forced them to borrow even for salaries and other recurring expenditure.
The state has already initiated a cut of 67% on spending on development and social schemes worth about ₹70,000 crore. “There is a huge pendency of GST payback, devolution of Central taxes and grants from the Centre. We have been demanding a package, including the advance of the GST compensation since Maharashtra is the highest tax-paying state. In the absence of adequate revenue receipts, we are ought to tap other sources to meet the mandatory expenditure,” said Shambhuraj Desai, minister of state for finance.