The Maharashtra government on Monday declared a freeze on new capital works until March next year, The Indian Express reported. The state, which has been worst affected by the coronavirus pandemic, slashed spending in development projects under government schemes by 67% for the 2020-’21 period.
“This is the deepest ever cut in expenditure since the state was formed in 1960,” an unidentified official told the newspaper.
The government has ordered departments to withhold tenders for new purchases and approvals for new development projects. It has also put a stop on all departmental transfers to ensure continuity in administration during the outbreak. Only procurements of infrastructure and items required for combating the pandemic will be allowed, it said.
As the state is expected to continue to suffer the whiplash of the economic fallout of the pandemic, the government has stayed all new works except “operational expenses” for Covid-19 control measures.
Until the lockdown is lifted, only five departments – public health, medical education, food and drug administration, food and civil supplies, and relief and rehabilitation – have been authorised to commit to new spending. However, they too have been asked to restrict themselves and make purchases that are indispensable to the state’s efforts of containing the outbreak.
Besides the cut in the development expenditure, the state has also put on hold fresh recruitment until further orders. “Department secretaries have been asked to review all ongoing schemes,” an unidentified official said. “Only those that are unavoidable will be taken up on priority. Some others will be stayed. Others that can be avoided will be cancelled.”
This came less than two months after the Maha Vikas Aghadi government of the state had presented a budget of Rs 4.35 lakh crore for the year 2020-’21 – an increase of 4.1% over the revised estimate for the year 2019-’20. The only other state with a bigger budget than Maharashtra is Uttar Pradesh.
However, as the countrywide lockdown to flatten the transmission curve of Covid-19 infection, entered its third phase, the Maharashtra Finance Department estimated a loss of about Rs 50,000 crore in the state’s tax revenues – a trajectory, which officials said, is likely to continue spiralling downwards.
Maharashtra Deputy Chief Minister, who also holds the portfolio for finance, had reportedly approached the Centre seeking a Rs 50,000-crore worth stimulus package for the state economy. However, the Centre has not committed to anything, so far.
For Centrally-sponsored schemes, 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,” an order of the Maharashtra government stated. Departments have also been barred from releasing funds to loss-making corporations for now.
Departments have been asked to prioritise spending on committed non-developmental liabilities, including salaries, wages, pensions, and servicing of debt.
Maharashtra has reported 12,974 Covid-19 cases, accounting for 30% of all cases in the country, and has registered 548 deaths, almost 40% of all deaths in the country, as of Tuesday, according to the Ministry of Health and Family Welfare.
India has recorded 46,433 coronavirus cases and 1,568 deaths as of Tuesday morning. In the last 24 hours, India has reported 3,900 fresh cases and 195 deaths. This is the highest single-day jump so far.