“Maharashtra is the diamond-studded crown of India”...
As the Finance and Planning minister of Maharashtra for the last 10 consecutive years, I have presented state budgets for 11 times and was able to effectively enforce the state’s fiscal reforms. Actually, while assuming office as the Finance and Planning minister, I had decided to take an overall review of the state’s economy. Out of this exercise, a white paper with commentary on the economic system was published. I realized through the medium of white paper what the economic condition of the state is. It also gave an idea of what measures are needed for restoring the health of economy. I realized that it was inevitable to take some bitter and disciplined decisions to restore the glory of state’s economy. While implementing these decisions, I had to exercise some control on the various programs of the state government, subsidies and grants offered through schemes and the standing of guarantees.
For the time being, new recruitment of personnel had to be stopped. In this period, there was no new recruitment in any department of the state government. A legislation was passed via Maharashtra Fiscal and Budgetary Management bill to make up for the fiscal and budgetary deficits. It is often found that a major portion of the income from state revenue is spent on the capital work and hence it is clear that the developmental works do not get the requisite funds. Hence, belt-tightening measures had to be taken to cut down on administrative expenditure. It became possible to move the state’s economy from deficit to surplus by achieving golden mean in all factors. Due to the effective implementation of programme of fiscal reform, a positive discipline in fund distribution of all departments of the state government was ensured. To achieve this, an experiment called budget distribution system (BDS) was carried out. The state government distributes a fixed amount of fund to the various departments for carrying out developmental works every year. Most often, this fund lapses as it is not spent within the deadline. Hence a monthly fund distribution system was developed to implement developmental works. This system led to the elimination of fund lapses.
The possibility of the fund remaining unspent also got eliminated and developmental works were carried out well in time to people’s satisfaction. During this period, the amount of fund earmarked for district planning was tripled and discipline was also maintained to ensure that the fund for the district was spent well in time.
VAT (Value Added Tax) was introduced in the state during this time which enabled the state to increase its income. Since both sales tax department and finance department have been completely computerized, transparent transactions began to take place in the sales tax department. The then UPA-ruled Central government felt compelled to take note of the fiscal discipline adopted by the state government. Maharashtra was honoured and extolled in the central planning board meeting as “Maharashtra is the country’ diamond-studded crown”. The then Prime Minister Dr Manmohan Singh patted on the back and showered compliments, adding one more feather to the cap of the state.
While handling such an important ministry as rural development, the fiscal reform programme did not let sit silent and out of this, was born the concept of implementing the e-banking in the state. There are around 28000 Gram Panchayats in the state. Out of them, 5500 villages have bank branches. The residents of the rest of the villages have to walk for kilometers to some taluka or town where the bank branches are located for banking transactions. Every time the villagers visit the bank at a distant place, they waste their time, money and suffer hardships. Moreover, there is risk in carrying money to and from bank. Taking this fact into consideration, now all the Gram Panchayats are being enabled with e-banking. The state government has even signed contracts with 27 nationalised banks for providing this facility. This path-breaking experiment has been successfully implemented in 500 Gram Panchayats in the state. Soon this service is planned to be provided in all the Gram Panchayats. Thousands of technically qualified and unemployed youths have got employment through all these projects. The beneficiaries include 4000 women and 2000 members of the families living below poverty line.