Farm loan waiver, infra push anchor ₹7.69L-cr Maha budget

Fadnavis, who took over as the state’s finance minister after the death of Ajit Pawar in a plane crash in January, becoming the state’s first CM to also present a budget, emphasised that the Mahayuti government was fulfilling its election promise of waiving farm loans up to ₹2 lakh

Mumbai: Farm loan waivers and a big push for urban infrastructure were the twin planks of the ₹7,69,467 crore budget presented by chief minister Devendra Fadnavis on Friday.

CM Devendra Fadnavis, Dy CM Sunetra Pawar and state finance minister Ashish jaiswal shows the budget bag before presenting it to state during the budget assembly session at Vidhan bhavan in Mumbai on Friday (Anshuman Poyrekar/HT Photo)

Fadnavis, who took over as the state’s finance minister after the death of Ajit Pawar in a plane crash in January, becoming the state’s first CM to also present a budget, emphasised that the Mahayuti government was fulfilling its election promise of waiving farm loans up to ₹2 lakh. In addition, the ₹36,000 crore outlay for the state’s flagship welfare scheme Ladki Bahin also remained unchanged from the last fiscal.

Over 2.8 million farmers out of 13 million registered on the unique ID system Agristack are expected to get the benefit of the waiver, said Fadnavis. In addition to the burden of ₹20,000 crore towards the waiver, another ₹15,000 crore will be paid to 2 million farmers who repay the loan regularly as an annual incentive of ₹50,000.

The populist schemes announced ahead of the 2024 Assembly polls--including the farm loan waiver, which will put an additional burden of around ₹35,000 crore once implemented in June this year--have had a cascading effect on the state’s economy. The fiscal deficit is estimated to rise from ₹1,36,235 crore in FY26 to ₹1,50,491 crore in FY 26-27, but the revenue deficit dropped from ₹45,891 crore in FY26 to ₹40,552 crore in FY 26-27. The accumulated debts of ₹11.03 lakh crore have resulted in the debt percentage touching 20.38% of the state gross domestic product (GSDP), which is the highest-ever in recent years.

The state government will spend ₹7.69 lakh crore in the coming fiscal year without breaching the fiscal deficit limit of 3% of the state’s gross domestic product. Fadnavis also did not impose any major taxes except for a modest hike in the environment tax on vehicles with BS-4 and below emission norms. The two-wheelers in such categories will have to pay ₹4,000, up from ₹2,000, while light motor vehicles (petrol and diesel) will have to pay ₹6,000- ₹7,000. “The environmental tax will help us mop up just ₹160 crore, but more than revenue, it has been imposed to promote the green vehicles,” the CM said.

Fadnavis’s budget also focused on infrastructure planning for future urban growth. In the works, he said, was a plan to develop more than 50 planned, multi-purpose urban clusters in the state to cater to the needs of a growing urban population, which could be up by 70% by 2047 as per the state’s estimate. The development plans of Pune, Nashik, Nagpur and Chhatrapati Sambhajinagar Growth Hub project will be prepared on the lines of the Mumbai Metropolitan Region, the CM said.

Fadnavis also spoke about plans to develop two more satellite cities--the third Mumbai in Raigad district around the Atal Setu and Navi Mumbai airport, and the fourth Mumbai near Vadhavan, where India’s biggest port is proposed to be built. In addition, the budget stressed on building new expressways, metro routes, elevated roads and underground roads in Mumbai and Pune to ease traffic congestion. The underground Metro 11 from the Gateway to Wadala will now be extended to Dharavi and Bandra Terminus, he added. The funding for these will come from multiple sources--state agencies like the Mumbai Metropolitan Region Development Authority, the union government or through loans from external agencies.

Maharashtra’s GSDP is expected to grow at 6.04% from ₹51,00,597 crore in the ongoing fiscal to ₹54,08,594 crore in FY26-27. “We still have a long way to go before we achieve the dream of making Maharashtra a $1 trillion economy by 2029-30. The state economy will have to cross the mark of ₹87 lakh crore at the current exchange rate in the next four years,” said an official from the finance department.

Significantly, the state government has revised its receipts estimate (RE) from ₹5.61 lakh crore (for FY 25-26) to ₹6.01 lakh crore, while the revenue expenditure for the year has been revised from ₹6.07 lakh crore (for FY25-26) to ₹6.39 lakh crore in the ongoing fiscal.

The actuals released in the budget books for FY24-25 for the revenue receipts are ₹4.82 lakh crore against ₹5.36 lakh crore (revised estimate). Similarly, the expenditure in the RE for FY24-25 was estimated to be ₹5.62 lakh crore; the actual expenditure was just ₹5.12 lakh crore.

“The huge gap in revenue receipts and expenditure is owing to the inflated figures in the revised estimates while presenting the budget, as it helps the government in keeping the deficit within the limits,” said an official from the finance department.

When asked about the rising debt stock against and whopping fiscal deficit, Fadnavis said, “Though the debt stock has risen to over ₹11 lakh crore, ₹89,000 crore of it has to be paid by the central government. The debt is within the FRBM parameters of 25% of the GSDP, and it is in proportion to the economic growth. Given its size, Maharashtra’s economy is now comparable to the economies of countries like Austria, Norway, Thailand, and Bangladesh,” he said.