No Money, No Problems: Why Did Maharashtra Spend Less Than Half of Its Budget in 2016-17?

As the state gears up to present its 2017-18 budget, utilisation of funds in 2016-17 has been below 15% in some "high-priority" areas.

Recent reports based on Maharashtra’s state finance department data, which indicate that only 45% of the state’s budgetary allocation was actually spent during the financial year 2016-17, are shocking. What has surprised people is that the utilisation of funds has been below 15% in some high priority areas and even below 10% in a few priority areas.

When this data was presented to budget analysts, they said that the utilisation figures were  unlikely to cover all 12 months of the financial year. However, even if this data covers ten or even nine months of the financial year, the fund utilisation overall and more so for some priority sectors is amazingly low.

Interestingly the state finance minister has not denied the allegations of very low utilisation but has instead offer a number of curious explanations.

But first let’s take a look at finance department’s data. It tells us that for the financial year 2016-17, out of the total budget funds of Rs. 3.04 lakh crore, only Rs. 2.06 lakh crore actually reached various departments and out of this only Rs. 1.38 lakh crore (amounting to 46%) of the original allocation was actually spent.

Keeping in view the acute water shortage in many parts of Maharashtra, this basic need should have been a top priority for the government but the utilisation in the case of allocation for water has been found to be 11.45%. The shortage of housing is a well-known issue in the state but the utilisation for this has been even lower at 8.66%. For environment protection, an area that deserves high priority allocation in view of the effects of climate change on the state’s long coastal area, the utilisation of funds is the lowest at just 7.76%.

This is disturbing state of affairs and so it is not surprising that state finance minister Sudhir Mungantiwar faced many questions about the low utilisation of funds. Here are a range of some of his answers, published in various newspapers:

There are some technical problems in spending funds despite its availability.”

We have saved money this year due to financial discipline.”

We also divert funds to other departments because we are short of funds.”

There is no point in spending money without proper planning.”

These are very curious explanations, to say the least. It is of course true that proper planning is needed to utilise funds effectively, but what prevented the various departments of the state government in carrying out this planning? In fact, some could argue, that the first task of these various departments is to carry out this “proper planning”. It is more than a little surprising to hear that the technical issues involved in allocating and utilising funds could not be sorted out in time.

It is even more surprising for the minister to pass off these low utilisation figures as a virtue, by calling it financial discipline. Taken to its extreme this logic would imply that not doing anything is the best discipline. Lastly, the explanation about diversion of funds should further explain why funds were diverted from such priority sectors, to which sectors these were diverted, whether these sectors had a genuine fund shortage, whether transparency was observed in diversion and what was the percentage of fund utilisation in those sectors or programs to which funds were diverted.

Clearly the explanations offered by the minister are less than adequate, and far from satisfactory. This matter of very low overall utilisation and the even more shocking low utilisation in some priority sectors needs to be probed further. This is certainly not just of academic interest as the denial of funds in critical areas like water, housing and environment protection means that at the grassroots poor people remain deprived of basic needs despite the legislature sanctioned availability of funds for meeting these needs. At the same time urgent tasks of ecologically protective steps which could have been taken up using the sanctioned funds are not taken up.

In previous years also the budgets of the state government have attracted criticism for firstly not making adequate allocations to social sector and secondly not utilising these funds properly and efficiently, but this year the situation appears to be even worse than in previous years. So this appears to be the right time to examine in greater detail and to question the working of the entire system, the various processes under which such excessive under-utilisation of available funds can take place in such high priority areas as water, housing and environment protection.

Bharat Dogra is a freelance journalist who has been involved with various social movements and initiatives.