Fiscal policy statement estimates Maha economy to grow to $1 tn by 2028, $3.5 tn by 2047

Mumbai, June 28 (IANS) The Maharashtra government in its Medium-term Fiscal Policy (MTFP) statement has proposed a comprehensive strategy for higher growth of the state's economy. 

The state economy during 2023-24 is expected to grow at 7.86 per cent, as per the Economic Survey released on Thursday. 

The MTFP statement, which was presented in the state Assembly along with the annual budget for 2024-25 by Deputy CM Ajit Pawar on Friday, has indicated that its successful implementation will take the state’s economy to $1 trillion by 2028, and $3.5 trillion by 2047, the 100th year of India's Independence.

To scale up economic growth, the state government has proposed to focus on employment generation, especially by putting together fast-track infrastructure and communication projects. 

Secondly, the government is laying emphasis on attracting domestic and foreign investment to further consolidate the state's pre-eminence. 

During the World Economic Forum meet held in January this year, the state government signed MoUs with 19 companies with a proposed investment of Rs 3 lakh crore which is expected to create two lakh jobs.

Thirdly, the government plans to keep the revenue deficit limited. It expects a revenue deficit of 0.47 per cent of the gross state domestic product (GSDP) but it has set a target to bring it down to 0.25 per cent in 2025-26 and 2026-27. 

Further, the government proposes to reduce the fiscal deficit of 2.59 per cent in 2024-25 to 2.43 per cent and 2.27 per cent in 2025-26 and 2026-27, respectively, which will be below the prescribed limit of 3 per cent of the GSDP. 

The government also proposes to raise a total of Rs 1,30,470 crore in 2024-25 of which 79 per cent will be raised from the open market at cheap rates. Net borrowing of Rs 75,916 crore from the open market is 76 per cent of the fiscal deficit.

The government has proposed to maintain the tax revenue of 11.70 per cent of GSDP in 2024-25, 2025-26, and 2026-27. The total debt stock, which was Rs 7.11 lakh crore in 2023-24 and is expected to increase to Rs 7.82 lakh crore in 2024-25, will be 17.59 per cent and 18.35 per cent, respectively. 

However, the government has estimated total debt of 18.61 per cent and 18.91 per cent in 20256-26 and 2026-27, respectively, in the wake of its focus on generating productive assets. The total debt will be maintained within the permissible limit of 25 per cent of the GSDP.

The interest-to-revenue ratio on loans was 10.28 per cent as of 2022-23 and is expected to remain at 11.37 per cent for 2024-25.

The MTFP statement also emphasised the need to implement the fiscal policy effectively to energise the state’s economy, especially when there are signs of inflation coming under control. 

The government proposes to lay emphasis on increasing various taxes and non-tax revenues under the state excise department, motor vehicles department, and registration and stamp duty, especially when the share of the state goods and services tax in the state’s own tax revenue is approximately 45 per cent. 

However, the policy statement has made a strong case to increase efforts to prevent leakage of revenue and recovery of tax arrears by taking strict action in the case of tax evasion.

(Sanjay Jog can be contacted at [email protected])