Cash-strapped Maha govt initiates spending cuts from 5-30%

Capital expenditure on constructing buildings and roads, buying vehicles and publicity, among others, has been cut by 30%.

Mumbai: The cash-strapped Maharashtra government will not spend 100% of the state budget for the financial year ending March 2025. Struggling to balance the books after launching several populist schemes ahead of last year’s assembly elections, the state government will cut spending by 5-30% across various departments, according to a government resolution issued on Wednesday.

Struggling to balance the books after launching several populist schemes, such as the Majhi Ladki Bahin Yojana, ahead of last year’s assembly elections, the state government will cut spending by 5-30% across various departments. (Praful Gangurde/HT Photo)

Capital expenditure on constructing buildings and roads, buying vehicles and publicity, among others, has been cut by 30%, while the budget for overtime allowance, telephone and water bills, rent and taxes, arms and ammunition, fuel, and commercial services has been cut by 20%.

If 100% of the budgetary allocation is released, the state’s fiscal deficit in FY 24-25 is expected to be over ₹2 lakh crore, up from the estimated ₹1.10 lakh crore.

“The total receipts of the government are expected to be around ₹6.25 lakh crore, including the revenue receipts of around ₹5.10 lakh crore,” said a Mantralaya official. “To keep the expenditure close to the receipts, a cut to expenditure is inevitable as the actual fiscal deficit will be over ₹2 lakh crore. An average cut of around 20% will enable us to reduce the gap between income and expenditure.”

While such budget cuts are not uncommon, they’re 5-10% more than in previous years thanks to the huge spending on populist schemes, added the official.

The Mahayuti government, comprising the Bharatiya Janata Party, Shiv Sena and Nationalist Congress Party, cruised to a landslide win in the Maharashtra assembly elections in November on the back of populist schemes such as the Majhi Ladki Bahin Yojana and the Annapurna Yojana. But the victory appears to have come at a cost, quite literally.

For instance, since the formal launch of the Ladki Bahin scheme in July 2024, the state government has been paying about ₹3,700 crore per month to 24.6 million women enrolled under the scheme.

Spending on such schemes forced the state government to produce a supplementary budget of ₹1.30 lakh crore in December, after presenting a budget of ₹6.69 lakh crore for FY 2024-25 in June. As of February 12, the state government has released ₹6.18 lakh crore of the budgetary allocation of ₹8.23 lakh crore, although the actual expenditure so far is ₹3.86 lakh crore—46.89% of the budgetary allocation.

The cap on spending for the remaining period of the financial year is a bid to restrict expenditures to 80-85% of the state budget. The state government has asked all its departments to restrict spending to 70-95% of the budgetary allocation depending on categories, according to the government resolution.

The construction and investment budget has been capped at 70%, resulting in a drastic drop in capital expenditure. Spending on contractual services and wages has been capped at 90%, while the salary budget has been capped at 95%.

Pensions, scholarships and stipends, interest, loan repayment, district annual plans, grants to centrally sponsored schemes, and MLA development funds have been exempted from the cuts.