With GST, consuming states will be at profit

Sudhir Mungantiwar, Minister of Finance, Planning & Forests, Government of Maharashtra, makes significant revelations about the state finances and also discusses smart cities and GST.

Maharashtra was once considered among the best administered states in the country, but now it is buried under the debt of around Rs 3,00,000 crore. What is the strategy of your ministry regarding the current situation?
We are currently in a debt trap, with a loan of Rs 325,000 crore. This is a challenge that our government was faced with when it came to power. In order to overcome this, whatever money we spend has to be put in proper use and for this purpose, we have decided on some measurements. Gradually, based on these measurements, we would like to go ahead with the finance and other disputes of the state. For example, earlier with rate contract, Rs 2,000-3,000 crore worth purchases were carried out in the state. The meaning of rate contract is in case of emergency you should be able to purchase without tender. There was never any evaluation of these purchases. The present government opines that whatever yojna is made, it has to be executed in an organised and planned way. Hence, with the rate contract, not more than Rs 1 crore will be spent in a year. This is a revolutionary step which will limit corruption as well as money spent.

Also, since we have a loan of approximately 7.75-8 per cent of interest, we are looking for avenues to shift the loan, so as to bring down the rate of interest. There have been offers from institutions of other nations like Singapore and China, but we will deal only in Indian currency.

Are these institutions financial institutions or ADB?
These are financial institutions. Through ADB we have not taken any loans yet. We will make use of that in the coming stages.

Around Rs 1 lakh crore worth projects are going on, of which some are stuck, without proper financing. How is the Maharashtra government going to finance these projects? Which are the priority projects?
We wish that in Maharashtra whatever pending railway projects are there, they should be completed within the time limit. Now, it is not being completed even in 25 years. On segregation basis, we have decided that the project which can be completed in a year, we will allot complete funds to that. The project which can be completed in two years, we will fund them in two years; and for the rest of the projects, we will be allotting project finance to them. There were several meetings based on this. We will take final decision in an upcoming meeting regarding this. For instance, there are 404 incomplete irrigation projects. This will be done on priority basis to prevent project cost escalation by 10 per cent per year.

Is there any thought of scrapping the pending projects ?
For the projects which have not even started, we cannot finance them. In Ajansara, not even a rupee has been spent. But we are not scraping those projects. As and when the situation gets better, those projects which are kept aside will be re-estimated. We have a project already like Prashaskiya Manyata, which will be developed. We cannot scrap any project because already there is capital investment involved. Knowledge has been invested.

Urban development is the key focus issue. Some of the cities in Maharashtra have been named under the Smart Cities Mission. What is the role of the finance ministry in the development of the smart cities?
We are pondering on the distinct roles of the central and state governments in terms of smart cities. After that, we will go ahead with the concept of smart city in terms of finance, i.e., if any additions have to be made in the state for the concept of smart city centre. Earlier, we had thought that if there is government land near a big city, then we can develop a city like Takshashila, Nalanda, or the hill city that is being developed at 1.9 million feet in Dubai.

We have estimated the land for this purpose also. Near Pune, Wadwal, and Thane, we have land. Near Pargad, we have 12,500 acre of land. Aurangabad also has 200-250 acre of land. We are thinking how we can utilise this land, but this is still in the primary stages of thought.

During the development of a smart city, we have to keep in mind the development of all cities because nowadays 49-50 per cent of the population is urban. Urban population should get better services from the govern¡ment like good drinking water, better education system, better transport system, and better communication system.

What will be the impact of GST when implemented in the state?
Article 52 permits us for income tax or Octroi, but with GST it will be abolished. We feel that with the implementation of GST, our finances will improve. The Centre has assured us that even if there is a loss of even a rupee, they will compensate. However, what will be the profit is the subject matter of discussion. With GST, consuming states will be at profit. The progress of manufacturing state is time-bound. When VAT was introduced, people were sceptical. But VAT has proved to be profitable. We have come to know that through VAT, we have made an income of Rs 69,000 previous year and this year we are thinking of making approximately Rs 84,000.

– RAHUL KAMAT