Maharashtra Budget: Ambitious focus on welfare programmes; but where is the money?

NDA government unveils welfare schemes targeting women, youth, and farmers, but experts cite implementation challenges and strain on exchequer.

Maharashtra Chief Minister Eknath Shinde with State Deputy Chief Ministers Devendra Fadnavis and Ajit Pawar during the Mahayuti meeting in Mumbai on July 6. With the Assembly election due in October, political compulsions have trumped financial discipline in the 2024-25 State Budget. | Photo Credit: Deepak Salvi/ANI

Inaugurating the Bundelkhand Expressway at Jalaun, Uttar Pradesh, on July 16, 2022, Prime Minister Narendra Modi warned against the revadi (freebie) culture “that is detrimental to the development of the country”. However, the ruling National Democratic Alliance (NDA) in Maharashtra is doing exactly that. On June 28, Deputy Chief Minister and Finance Minister Ajit Pawar presented the Budget for 2024-25 of Rs.6,12,293 crore, with special schemes such as cash doles and subsidies for women, the youth, and farmers. The projected fiscal deficit is Rs.1,10,355 crore although the government claims that it is within the limits set by the Fiscal Responsibility and Budget Management Act.

What has trumped financial discipline is political compulsions with the Assembly election due in October. The NDA fared badly in the recent parliamentary election, winning just 17 of the 48 Lok Sabha seats in the State; the BJP’s tally dropped from 23 in 2019 to just 9. Chief Minister Eknath Shinde’s Shiv Sena won 7 and Ajit Pawar’s Nationalist Congress Party won just 1 seat.

Inflation, unemployment, and agricultural distress are said to be the main reasons for the debacle, hence the major schemes announced in the Budget. The most ambitious of them is the “Ladki Bahin” (beloved sister) Yojana at Rs.46,000 crore. It is modelled on Madhya Pradesh’s “Laadli Behan” scheme, which is said to have brought the BJP back to power in that State in 2023.

The Ladki Bahin scheme is aimed at 2.5 crore beneficiaries between the ages of 21 and 65, who will get a monthly payment of Rs.1,500 into their accounts. Only women from families with an annual income of less than Rs.2.5 lakh and who have not availed themselves of other benefits, such as the Pradhan Mantri Kisan Samman Yojana, are eligible. The government has plans to disburse the instalments of July and August on August 15. August 19 is Raksha Bandhan, which celebrates the brother-sister bond.

Administrative hurdles

However, according to the initial note submitted by the Finance Ministry to Chief Minister Shinde, which Frontline has accessed, the scheme faces many administrative hurdles. For instance, it states that the scrutiny of applications in such a short time is practically impossible. At least seven lakh women are expected to apply for the scheme in each district. A committee led by the District Collector, entrusted with the scrutiny of applications, will have to clear almost 20,000 forms a day to complete the process in a month.

Although there is a provision to file applications online, there are serious reservations about it. “Any software needs time for testing. Here there is no time at hand. The biggest issue while filing applications is the poor Internet connectivity in rural areas, especially in the monsoon months. This needs to be addressed first before taking any step,” said an official in the Women and Child Development (WCD) Department, the nodal agency to implement the scheme. The official cited the example of the BJP-led government’s loan waiver scheme for farmers (Chhatrapati Shivaji Maharaj Krushi Yojana) in 2017, which came a cropper for lack of clarity in filing online applications. Ultimately, the BJP faced a serious backlash.

Indicating that the Ladki Bahin scheme could meet with the same fate, the official said: “The Budget announcement was for beneficiaries between 21 and 60. This has been raised to 65 following the opposition’s demand.” Further, the government extended the deadline for the filing of applications from July 15 to August 31 after the Congress’ Prithviraj Chavan requested it to do so.

To speed up the process, the government is now planning to cross-check the applications with the data of almost one crore women registered with the Food and Civil Supplies Department for distribution of ration. This will be a mammoth task, considering that the government barely has two and a half months before the announcement of the Assembly election. In Madhya Pradesh, the election was held nearly seven months after the scheme was launched in March 2023.

“This announcement in the Budget is certainly stretching things too far,” said Ajit Joshi, a financial expert in Mumbai. “The Budget has a certain sanctity. If the government starts announcing anything in the Budget just for the sake of politics and publicity, the importance of budgetary announcements will be over.”

Shiv Sena (UBT) leader Uddhav Thackeray with farmers whose crops were damaged, at Nipani in Chhatrapati Sambhajinagar district on July 7. Rural distress was a factor in the election, with the NDA winning just 8 seats in 37 rural areas. | Photo Credit: PTI

Money is another major concern in the implementation of the scheme. The Budget has provisioned only Rs.10,000 crore for the scheme against its total outlay of Rs.46,000 crore. To Chavan’s question on this, Pawar responded saying that enough money would be made available for the scheme. In the supplementary demands presented on July 9, the government made a further provision of Rs.25,000 crore. Incidentally, the total outlay for the scheme amounts to 9 per cent of the total capital expenditure in the Budget. In fact, the agricultural expenditure for 2024-25 is far less, at Rs.35,569 crore.

The NCP (Sharadchandra Pawar) group leader and former Finance Minister Jayant Patil criticised the government for not providing proper provision for the scheme. “Brother shall not cheat his sisters like this,” he said. To this, WCD Minister Aditi Tatkare responded that “the scheme will be thoroughly implemented in the State. We have a proper plan. It is a year-long scheme. The monetary provision will be done as the scheme proceeds.”

Yet another scheme for women which was announced in the interim Budget in February was the “pink E-rickshaw” Yojana. It will provide financial assistance to 10,000 women across 17 cities to buy e-rickshaws. The Budget also proposed reimbursement of tuition fees for vocational courses in engineering, pharmacy, medicine, and agriculture for girls from Other Backward Classes (OBC) and the Economically Weaker Sections. With an estimated expenditure of Rs.2,000 crore a year, this will benefit 2.05 lakh girls.

Targeting youth and farmers

The Mukhya Mantri Yuva Karyaprashikshan Yojana (Chief Minister’s Youth Work Training Programme) aims to provide on-the-job training in industrial and non-industrial establishments to 10 lakh youths a year. Each trainee will get a monthly stipend of up to Rs.10,000. The total outlay for this scheme is Rs.10,000 crore a year. Of these youth, 50,000 will be trained to disseminate information about the various government schemes.

It is similar to a provision in the Congress manifesto, which promised training to every graduate, with a monthly stipend of Rs.10,000 for one year. Unemployed youth voted against the NDA in the Lok Sabha election in large numbers.

The major scheme for farmers is the Mukhya Mantri Baliraja Vij Savlat Yojana (Chief Minister’s power tariff subsidy scheme). It aims to provide free electricity for agriculture pumps of up to 7.5 horsepower. Rs.14,761 crore has been earmarked for it.

Rural distress was a factor in the election, with the NDA winning just eight seats in 37 rural areas. The fall in cotton, soya bean, and onion prices made the situation worse. Cotton and soya bean farmers are mainly from the Vidarbha and Marathwada regions, which account for 18 Lok Sabha seats and 110 Assembly seats. Here, farmers generally use 5 HP pumps. So, a large number of farmers from these two regions will benefit from the scheme. The Budget has also announced Rs.5,000 a hectare financial assistance for up to 2 hectares for cotton and soya bean farmers. A revolving fund of Rs.200 crore has been created for the assured purchase of onions from farmers. In 2023-24, the government spent Rs.851.66 crore as subsidy to onion farmers at Rs.350 a quintal.

Inflation being another strong issue in the Lok Sabha election, the government has come up with a proposal to give three LPG cylinders free to 52,16,412 families under the Mukhya Mantri Annapurna Yojana. This will cost the exchequer Rs.970 crore a year.

Profligacy of populism?

The total outlay of Rs.96,000 crore for all these schemes constitutes 16 per cent of the Budget. As of now, the State’s committed expenditure is 55 per cent of the revenue. This includes salary bills (32 per cent), pension bills (12 per cent), and interest on loans (11 per cent). Out of the remaining, 16 per cent will now go for populist schemes. This will have a direct impact on infrastructure development and economic growth. The economic survey tabled on June 27 in the Assembly was telling: Maharashtra’s economic growth had fallen from 6.1 per cent in 2014-19 to 4.5 per cent in 2019-24.

The Ladki Bahin scheme is aimed at 2.5 crore beneficiaries between the ages of 21 and 65, who will get a monthly payment of Rs.1,500 into their accounts. In the picture, a meeting of a women’s self-help group. | Photo Credit: JOTHI RAMALINGAM B

According to a three-year fiscal strategy presented by Maharashtra at the instance of the Central government, the State’s growth rate is 5.56 this year. Factoring in inflation at 5.1 per cent, the State’s growth rate at constant prices would be just 0.4 per cent. The State’s debt situation is also not so desirable. In 2023-24, it was Rs.7.11 lakh crore. It is estimated to rise to Rs.7.80 lakh crore in 2024-25. The debt to gross State domestic product (GSDP) ratio is also set to increase to 18.4 per cent in 2024-25 from 17.6 per cent and to 18.9 per cent in 2025-26. According to the economic survey, Maharashtra is at an embarrassing sixth place in terms of State income, below Gujarat, Karnataka, and even Haryana.

Chavan claimed that the government was hiding the truth from the public. He presented a Press Information Bureau press note of July 24, 2023, that said that Maharashtra, with a per capita net SDP of Rs.1.46 lakh, is at number 11 in the country. Deputy Chief Minister Devendra Fadnavis responded by saying that “the per capita income of smaller States like Sikkim, Puducherry. and Uttarakhand are always higher than that of big States like Maharashtra. So, generally the smaller States are not taken into consideration while making the economic survey.”

Substantial reduction in key areas

While populist schemes take up almost 16 per cent of the Budget outlay, the expenditure books show that there is a substantial reduction in key areas. For instance, agriculture faces a reduction of 15 per cent. Almost 55 per cent of the 13 crore population in the State stays in rural areas. Of this, 87 per cent is dependent on agriculture. The reduction in the Budget allotment for agriculture will have a long-term impact on the sector.

There is also a 7 per cent reduction for SC, ST, OBC, and minority development and a 9 per cent reduction in the allotment for the health department.

The fiscal profligacy does not end here. The supplementary demands for Rs.94,889 crore constitute 15 per cent of the total outlay, the first time they are breaching the 10 per cent mark. This will also have a negative impact on fiscal policy. The Budget estimates a revenue deficit of Rs.20,051 crore for this financial year; with the addition of Rs.94,889 crore, it will go up to Rs.1 lakh crore.

The populism in the Budget has a hidden agenda too. The supplementary demands are for works in the constituencies of ruling party MLAs. The approved demands will allow completion of the tender process and issuance of work orders. However, any major construction work will begin only after the end of the monsoon season in September. By mid-September, the Model Code of Conduct will be announced. So, effectively, the supplementary demands will be used to seek votes even before the work begins on the ground. What happens to them after the election is anybody’s guess.