Mumbai: The Maharashtra budget session is scheduled to commence on Monday, with the state’s Finance Minister set to present the budget for the fiscal year 2025-26 on March 10. This year’s budget is anticipated to pose significant challenges for the government, given the mounting financial pressure on the state treasury and the need to deliver on election commitments.
During the Assembly elections, the Mahayuti alliance pledged to raise the “Mukhyamantri Ladki Bahin Yojana” amount to Rs 2,100 from the present Rs1,500 monthly. Furthermore, the government had promised a loan waiver for farmers.
As a result, all attention is now focused on whether these assurances will be honored in the upcoming budget. Notably, this will be the first budget presented by the Fadnavis government in its current term, making it highly significant
In the last budget, before the assembly elections, the state government announced various welfare schemes worth Rs 96,000 crore. These included the Mukhyamantri Majhi Ladki Bahin Yojana, an apprenticeship programme for youth, free electricity for agricultural pumps up to 7.5 HP, scholarships for EWS girls, and three free gas cylinders for 52 lakh households.
However, these pre-election promises put a heavy financial burden on the state, pushing its debt to Rs 7.8 lakh crore for 2024-25. The government also requested additional funds of over Rs1.3 lakh crore for unplanned expenses. The finance department repeatedly warned that the state’s financial health was worsening.
The fiscal deficit doubled to nearly Rs 2.74 lakh crore for 2024-25, exceeding the 3% GSDP limit. By the end of this financial year, the state will be among six major states to reduce capital spending. This will also be the first year since Covid when the state spends less on infrastructure than the previous year.
Considering the state’s financial situation, the government and the finance minister have limited options. The first option is to increase government revenue, which would put a burden on the general public. The second option is to cut government spending and reduce expenditure on various schemes.
The government is considering ending schemes such as Anandacha Shidha and Shivbhojan Thali. Additionally, other schemes may also be discontinued. The third option is to reduce or discontinue free welfare schemes, and the fourth option is to take on more debt.
Currently, the state’s debt has risen to Rs7.5 lakh crore. The borrowed funds are being used for various infrastructure projects. However, even if more loans are taken, the interest burden will continue to increase.
“The cash-strapped Maharashtra government will not fully utilise its budget for the financial year ending March 2025, cutting spending by 5-30% across departments to manage finances strained by populist schemes launched before last year’s assembly elections. Capital expenditure will see a sharp decline, with the construction and investment budget capped at 70%. If full allocations were released, the fiscal deficit for FY 24-25 could exceed Rs 2 lakh crore, up from the estimated Rs 1.10 lakh crore. With total receipts projected at Rs 6.25 lakh crore (including Rs 5.10 lakh crore in revenue),” said a Mantralaya official.
“To keep the expenditure close to the receipts, a cut to expenditure is inevitable. An average cut of around 20% will enable us to reduce the gap between income and expenditure,” he added.
Amid strained finances, the Maharashtra government has formed a committee of secretaries to explore new revenue-generating measures, including boosting excise revenue and opening government land to private players. Funds for existing schemes are being withheld, including the ‘Mukhyamantri Teerth Darshan Yojana,’ which sponsors pilgrim trips for senior citizens.
Launched in June 2023, just months before the 2024 Assembly elections, the scheme saw 6,424 beneficiaries visit Ayodhya’s Shriram Temple between July and October. Post-elections, only one trip to Gaya, Bihar, with 800 beneficiaries, has been conducted, while 14 planned tours to Ayodhya and Puri are on hold.
The government is also considering discontinuing two other schemes: the Shiv Bhojan Thali (subsidised meals for the poor) and Anandacha Shidha (festive grocery kits), which together cost Rs1,300 crore this fiscal year. Ministers have cited the financial burden of the Ladki Bahin scheme as a contributing factor to the state’s fiscal challenges.
The big question remains, how many of the election promises will actually be fulfilled? The Ladki Bahin Yojana alone has put a financial burden of Rs 47,000 crore on the state government. Additionally, scrutiny has revealed that nearly 25 lakh women may be ineligible under the scheme’s criteria.
If the promised Rs 2,100 per month is implemented, it is unclear how much the financial burden will increase, but estimates suggest it could rise to Rs 64,000-Rs 67,000 crore. This makes it difficult for the government to fulfill this key promise. At the same time, it remains to be seen whether farmers will get relief through the promised loan waiver, which will also be a crucial factor in the upcoming budget.
