Fiscal squeeze: State curbs spending amid ₹81,500-cr relief burden

The state finance department, in a circular issued on Wednesday, cited the state’s limited resources and called for stricter expenditure controls

MUMBAI: Amid mounting pressure on the state exchequer, the Maharashtra government has tightened the rules governing supplementary budgetary demands ahead of the winter session of the state legislature, restricting additional spending to urgent and essential requirements.

Fiscal squeeze: State curbs spending amid ₹81,500-cr relief burden

The state finance department, in a circular issued on Wednesday, cited the state’s limited resources and called for stricter expenditure controls. “Considering the state’s limited resources, it is necessary to ensure proper planning of expenditure against budgetary allocations and to exercise control over expenditure provided for in the budget,” the circular states.

The move assumes significance as the state government’s preliminary estimates suggest that its drought relief package alone could cost more than ₹45,000 crore. The substantial outlay threatens to put further pressure on the state’s finances, coming on top of the Punyashlok Ahilyadevi Holkar Shetkari Karjmukti Yojana 2026, the farm loan waiver scheme estimated to cost ₹36,585 crore. The relief burden currently amounts to more than ₹81,500 crore.

The fiscal pressures come only months after chief minister Devendra Fadnavis presented a ₹7.69-lakh crore budget for 2026-27 in March. It also declared the state’s accumulated debt to be ₹11.03 lakh crore, with the debt-to-GSDP ratio touching 20.38%, its highest in recent years. In June, the state government tabled supplementary demands amounting to ₹97,706 crore, equivalent to 12.70% of the total budget outlay.

Supplementary demands are sought to meet expenditure beyond provisions in the annual budget.

Against this backdrop, the state finance department has made it clear that supplementary demands cannot be treated as an open-ended source of additional funding. Departments will have to demonstrate the urgency and necessity of their requests, with proposals subject to tighter scrutiny.

“Proposals for supplementary demands should be considered only for highly urgent and essential committed expenditure, court-related matters, and expenditure relating to centrally sponsored schemes,” the circular states.

The finance department has also prescribed thresholds for seeking additional allocations. For central and externally aided schemes, including centrally sponsored schemes, supplementary funds may be sought where no budgetary provision exists or where more than 50% of the existing allocation has been spent and additional funding is required.

For other expenditure heads, departments may seek additional funds if more than 70% of the budgetary provision has been utilised, further funding is necessary and the shortfall cannot be met through reappropriation during the current financial year.

“These conditions place the onus on departments to demonstrate that additional funding is essential and cannot be managed within existing allocations,” a senior finance official said.