Uncontrolled spending on populist schemes in the election year in Madhya Pradesh has led to the state heading towards a major financial crisis with “overdraw” from the Reserve Bank of India being the last option. The state is witnessing such a situation after 15 years.
Additional chief secretary of finance department, A.P. Shrivastava, reportedly irked with the extension given to the chief secretary and unhappy with the spendthrift attitude of the BJP ruled government, had gone on an undeclared leave. No senior officer is ready to fill the position of principal secretary of finance department even as the post is lying vacant, said a source in the state Mantralaya.
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A financial crisis has been looming large over the state for quite sometime. At a high-level meeting of finance department on June 21, Chief Minister Shivraj Singh Chouhan was apprised with the emergent situation. He was warned that it would be difficult to pay even the salaries of government employees if anything was not done urgently.
With the resources shrinking and expenditure increasing, officials of the finance department are in a quandary. It is anticipated that all the major infrastructure work may have to be stopped and contractors will be asked to wait for their payments.
Though Finance minister Jayant Malaiya presented a supplementary budget of Rs 11,190 crore in the assembly on June 26, the state could manage to get only Rs 5,000 crore. After the regular budget in March this year, the government had taken a loan of over Rs 4,000 crore during April, May and June. According to sources in the finance department, the government was planning to take an additional loan of Rs 1,000 this week, but the higher interest rate of 8.25 per cent delayed the decision.
According to a CAG report presented in march this year, Madhya Pradesh is indebted with a loan of Rs 1.83 lakh crore. The state government has spent Rs 47,564 crore in last two years as interest on this loan. Recently, the government defaulted on payment of arrears announced for its employees.
Congress state president Kamal Nath said, “This is an emergency of sorts. The chief minister should immediately come forward to explain the whole situation to the people of Madhya Pradesh’’.
Finance Minister Malaiya told media that there is a situation of "over draw", but we will manage it and there will be no dearth of funds to pay salaries of employees.