Maharashtra has committed itself to a capital expenditure cap and a time-bound phasing out of subsidies in power, education and transport as per the memorandum of understanding it signed with the Union government for implementing its medium term fiscal reforms programme.
As a result, consumers will see costs rising significantly over the next three years.
Under the MoU, the state government has promised to 'raise by 10 per cent all fees, service charges and levies. During the fiscal review, these levies would be linked to an inflation index to be finalised by December 31, 2002, to ensure that in future the rise is automatic.'
"Water charges will also be revised so that it meets at least 20 per cent of the operation and maintenance charges by December 31, 2003. Subsequently, charges would be increased by 10 per cent each year," the MoU stated.
Similarly, no new government-aided institution would be permitted to be set up in Maharashtra till the fiscal 2004-05 in the field of secondary and higher secondary education, higher and technical education, agricultural and medical education.
The non-salary grants extended to aided institutions will also be reduced and discontinued by 2004-05.
In respect of salary grants to aided institutions, the same would be reduced in stages from the current fiscal by recovering the appropriate fees from students.
"Subsidies in the power and transport sectors will be contained. As an explicit policy, subsidy should be gradually reduced with the existing subsidy in transport brought down from the current fiscal in annual stages so that the amount of government subsidy as a percentage of net revenue payable on this account during the fiscal 2004-05 is reduced to 50 per cent of the present level."
Under the MoU, the Maharashtra government is also prohibited from indulging in any capital expenditure for new projects till 2004-05.
"Unless funded by external or central assistance, no new capital expenditure projects shall be taken up. No new medium or major projects will be undertaken till funding of spill-over projects is taken care of," the MoU stated.
The MoU also provides for a review of the performance of co-operatives where the state government has a substantial stake.
The state government is also barred from setting up any new public sector enterprise under any circumstance, except PSUs dealing with the welfare of backward classes.
