Faced with slowdown, state govt to slash development budget by 20%

Faced with economic slowdown, poor tax collection and huge spending on drought relief, the state government now plans to slash its development budget by 20%. The move is likely to affect infrastructure works such as roads and dam projects.

The tax collection from the state excise, stamp duty and registration, electricity duty, goods and passengers has been hit by the financial slowdown. While the excise department achieved 67% of its target (Rs 9,450 crore), goods and passengers reached 2.38% and electricity duty reached 33.53% by the end of December 2012. The stamp duty and registration departments have nearly achieved their targets.

The lower revenues are likely to force the government to restrict its annual plan for 2013-14 to Rs 45,000 crore, similar to last year's. The drought situation in 13 districts of the state has further worsened the condition of the state exchequer, as the mitigation measures require Rs 2,200 crore, to which the Centre has provided Rs 778 crore.

"The 20% cut is under consideration. The final decision will be taken in the high-power meeting chaired by chief minister on Monday," said Rajendra Mulak, minister of state, finance and planning department.

Anticipating the crunch, the finance department had, last month, decided to cut the district planning funds for development works by 20%. After the uproar by MLAs across parties, the decision was withheld and the remaining amount was released. The department, led by deputy chief minister Ajit Pawar, has decided to bring about an overall cut in the budget.

"In such a scenario, the heads of the expenditure are prioritised and the funds are released accordingly. The current debt burden of the state is Rs2.56 lakh crore The government has now approached the Centre with its revised proposal for the permission to obtain a loan of Rs7,000 crore, after its earlier Rs9,000-crore proposal got rejected," said an official from the planning department, on condition of anonymity.