Spending on development works hiked to 75% in Maharashtra

The Maharashtra government on Wednesday announced that will up the spending on development works. The current limit is set at 33 per cent but with this development, it can now go up to 75 per cent. The fresh relaxations declared by the state government are applicable to around 21 departments that are expected to generate revenue and create jobs.

In a first among state governments, the Maharashtra government lifted caps on capital spending to revive demand in the economy.

The government has also allowed 100 per cent spending of local area development funds allocated through Member of Legislative Assembly Local Area Development Schemes (MLALAD), and 100 per cent spending of district planning committee (DPC) funds. An order to this effect was issued by the state finance department on Tuesday.

In addition, lifting the cap on spending for district development and through MLAs fund is expected to release over ₹40,000 crores for creating assets and boost jobs and consumption in the state.

The state has budgeted ₹43,000 crores of capital expenditure for the financial year 2021 which are essentially asset creating expenditure in infrastructure projects like roads, irrigation and buildings. Lifting the cap to 75 per cent is expected to release ₹30,000 crores to execute various projects.

Meanwhile, the entire ₹10,000 crores budgeted for district development through district-level bodies and ₹1,000 crores earmarked for capacity expansion through MLAs funds will also be fully utilised this year. Unlike revenue expenditure, capital expenditure will be directly disbursed through the government departments and released into the system.

The departments that are allowed to make the increased spending are industries, energy, labour, general administration, home, rural development, water resources, revenue and forest, food and civil supplies and consumer protection, social justice and special assistance, agriculture, animal husbandry, dairy development and fisheries, public health, school education and sports, medical education, urban development, tribal development, finance, public works department, soil and water conservation, Maharashtra legislature secretariat.

Earlier, this year in May, the state government had pronounced 67 per cent cut in its spending for developmental works this fiscal. The decision was taken to cope with the estimated revenue losses of more than ₹40,000 crore in March and April 2020, due to COVID-19 pandemic.