Government’s off-budget loans mount to ₹1.81 lakh crore

The outstanding guarantees are equivalent to 16.4% of the state’s estimated debt stock of ₹11.03 lakh crore for the current financial year

MUMBAI: While the Comptroller and Auditor General (CAG) has pulled up the Maharashtra government for its growing reliance on off-budget financing, the state has disclosed that it extended guarantees for loans worth ₹51,700 crore during FY2025-26. The guarantees cover borrowings by various agencies for infrastructure and housing projects, as well as loans raised by sugar factories controlled by politicians from the ruling alliance.

Government’s off-budget loans mount to ₹1.81 lakh crore

A statement tabled by the finance department in the state legislature on Friday revealed that these fresh guarantees have pushed the state’s cumulative outstanding guarantees to ₹1.81 lakh crore as of March 31, 2026, up from ₹1.44 lakh crore a year earlier. The outstanding guarantees are equivalent to 16.4% of the state’s estimated debt stock of ₹11.03 lakh crore for the current financial year.

Earlier, the CAG had tabled its report in the legislature. The report had slammed the government for its growing dependence on borrowings outside the budget. “Such borrowings understated the state’s actual debt burden and fiscal deficit and reduced transparency because they were not fully reflected in budget documents,” it stated.

The CAG report said the state’s fiscal sustainability could come under pressure also due to its large spends on the Mukhyamantri Majhi Ladki Bahin Yojana, mounting liabilities and large amounts of unspent funds parked outside the consolidated fund.

Mahavitaran, the state-owned power distribution company, borrowed ₹7,480 crore (including previous interest of ₹2,157 crore) from the Bank of Maharashtra, UCO Bank and HUDCO to repay outstanding sums to power generation and transmission companies and interest that had accrued. Similarly, Maharashtra Urban Infrastructure Fund raised ₹2,000 crore from HUDCO for infrastructure projects elsewhere in Maharashtra.

The Nagpur Metropolitan Region Development Corporation raised ₹7,800 crore from Hudco for roads, traffic islands and land acquisition in Nagpur city. The highest borrowing, of ₹22,250 crore on bank guarantees, was by the Maharashtra State Road Development Corporation (MSRDC) for the Virar-Alibag multi-nodal corridor and its land acquisition.

In addition, the state government has stood guarantee for two cooperative sugar factories under the control of ruling party politicians. Loans of ₹139.88 crore taken from the Maharashtra State Cooperative Bank Limited was for the Babanrao Dhakane Kedareshwar sugar factory ( ₹39.88 crore) and Shetkari Cooperative Sugar Factory ( ₹100 crore). The sugar factories are controlled by NCP leader Prataprao Dhakne and BJP MLA Abhimanyu Pawar, respectively.

A finance department official said the state government has been borrowing money through its agencies such as MMRDA, HUDCO, MSRDC or power companies to keep the its debt:GDP ratio below the FRBM guidelines. However, these loans ultimately become a debt liability for the cash-strapped state government as it eventually affects the state’s credit rating, a finance department official said.

The state’s outstanding debt is estimated at 20.38% of the Gross State Domestic Product (GSDP), an official revealed, adding that these loans, amounting to ₹1.81 lakh crore to the debt stock, pushes the debt-to-GSDP ratio beyond 25% - the ceiling prescribed under the Fiscal Responsibility and Budget Management (FRBM) Act.