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Coronavirus crisis: Maharashtra govt to cut expenses, puts recruitment, new projects on hold

BusinessToday.In     May 5, 2020

In a bid to tackle the economic situation arising out of the COVID 19 pandemic, Maharashtra, the worst-affected state, has announced a slew of measures, including no launch of new development projects and recruitment freeze. The government plans to cut expenses as revenue sources dry up. This will help the Uddhav Thackeray government to shore up revenue and meet unexpected expenditures like staff salaries and carry out important functions.

Maharashtra government's revenue has been severely hit as industrial and business activities remained largely crippled over the last one-and-a-half months.

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The state's finance department on Monday issued a government resolution (GR) outlining a series of measures to cut expenses for the financial year 2020-21. In a four-page order, Chief Secretary Ajoy Mehta declared public health, medical education, food and civil supplies and relief and rehabilitation as 'priority' departments.

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Here are the key measures announced by the Maharashtra government:

  • The government has asked various departments to review ongoing schemes and prioritise them to look at which can be cancelled and which can be deferred. The schemes that need to be cancelled should be communicated to the government by May 31.
  • The government will allocate only 33 per cent funds of the total budgetary allowance to each department.
  • The state government will not be spending on any new scheme it had undertaken from the start of fiscal 2020-21.
  • All departments have been asked to return unspent money from their bank accounts to the state treasury before May 31, 2020.
  • Recruitment in all departments, except public health and medical education, has been freezed.
  • All transfers of officials have been suspended to save on expenditure incurred on them.
  • The GR said the state's current financial condition is likely to remain for the next two to three months as it faces a challenge to revive the economy. "These measures are being taken as the decision to disburse salaries of March to state government employees in two instalments has not been enough," said the GR.

In February 2020, Maharashtra Deputy Chief Minister and Finance Minister Ajit Pawar had presented a budget of Rs 4.34 lakh crore. The total debt on the State till January 2020 was Rs 4,33,901 crore, the minister had said in his Budget speech.


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