Home >politics >policy >GST is a much needed reform for Indian economy: Maharashtra FM

Maharashtra contributes 15% to the country’s gross domestic product (GDP), the highest among all states. However, with the state hobbled by a 3.44 trillion debt—the third highest in country—and severe farm distress, meeting popular expectations will be no easy task for state finance minister Sudhir Mungantiwar as he prepares to present the state budget on 18 March. In an interview, Mungantiwar spoke about how he plans to tackle these challenges and indicated he will focus on effective implementation of existing schemes and allocating funds rather than announcing new ones. Edited excerpts:

While you were in opposition benches, you constantly attacked the Congress-Nationalist Congress Party (NCP) government for the state’s mountain of debt and how state economy was suffering because of it. Now, since you are in charge of the state’s economy, how you plan to tackle this problem?

If you have heard my speeches during that time, I never opposed taking loans for productive purposes, creating physical infrastructure or spending money on various welfare scheme meant for the poor sections of society. What I used to oppose was using the loan amount for running the government’s day-to-day expenditure.

So, it is going to be a big task for us to rationalize government expenditure, which we have started doing after coming to office. But more importantly, what I feel is that we need to prioritize government’s expenditure meant for various infrastructure projects and social welfare schemes. To give you a simple example, the last government used to cook food for a 100 people and send invites to 500 people and in the process, everyone remained hungry.

So, what I am planning to do is, instead of announcing new schemes, I will use resources available with me to complete existing projects and schemes and give priority to those projects and schemes which are near completion. And instead of making token provisions for schemes and projects which have not started yet or are in very early stages, funds will be allocated to projects which are near completion.

The Bharatiya Janata Party (BJP) in its vision document announced it will scrap the local body tax (LBT) but if the state has to scrap this tax and compensate municipal bodies for this, then it will put burden of 14,5000 crore on the state per annum. How you propose to do it?

Wait for the budget to see how we do it. I don’t think it is a very big issue; it is merely an issue of doing some structural changes to our tax structure. The idea was never to pay money from state’s budget to municipal corporations.

Does this mean we can expect some kind of surcharge on value-added tax (VAT) or some other similar arrangement?

Wait for the budget; I can’t reveal more at this stage than this.

Another promise made by BJP was making Maharashtra toll tax-free. It will add a burden of another few thousand crores on the state budget. How you plan to achieve this?

If you look at our vision document or manifesto, nowhere have we said we will abolish toll tax. What we have said is that the whole policy of toll taxes needs a comprehensive review and we are currently doing that.

The goods and services tax (GST) is expected to come into force in 2016-17. Once it takes effect, it will curtail the flexibility of state governments in imposing new taxes and raising resources. How do you plan to go about this?

The GST is a much-needed reform required for the Indian economy. It will make India one market and offer investors stable tax regime. However, I don’t think as a state government we need to worry about GST’s impact, as the centre has assured all states that it will compensate them if there is a fall in their revenues due to GST.

The state government in the winter session of the state assembly tabled a report of a committee headed by former finance commission chairman Vijay Kelkar on regional imbalances in the state. One of the key recommendations of the committee was that, instead of focusing on removing physical backlog in the so-called backward regions of the state such as Vidarbha and Marathwada, the government must focus on accelerated development of these regions. You yourself come from Vidarbha. How do you look at these recommendations?

The state will announce its position on the Kelkar committee’s recommendations after detailed discussion in the state legislature. However, what this committee tried to do was that it tried to rank various districts of the state on various parameters of physical and social infrastructure and tried to compare No.1, 2 and 3 districts with rest of the state and advocated some strategies for balanced development of the entire state; you will see a reflection of this in our budget.

Although the BJP and Shiv Sena are partners in the government, we often see the government being targeted in Sena’s mouthpiece Samana. Sena president Uddhav Thackeray had even lashed out at the government on some occasions. So, how is your government different from Congress and NCP, whose ministers use to criticise each other from public platforms?

Yes, it is true that we are often at the receiving end of criticism from Samana, and it doesn’t send a good signal to the people of the state. But we have decided not to join issues with Samana and focus on our job and see how we can a make difference in the common man’s life.

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