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Maharashtra Budget 2024-25: Largesse, sops lead to burden of ₹96,000 crore on exchequer
Government borrowed an unprecedented ₹82,043 crore in 2023-24, taking its debt burden to ₹7.11 lakh crore, even as spending on development projects decreased
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Mumbai: Budgetary allocations made for the MLAs from the breakaway factions of the Shiv Sena and Nationalist Congress Party over the last two years may have helped the Mahayuti alliance form a government in the state, but as the 2024-25 state budget presented on Friday showed, it has also led to Maharashtra’s development plan and capital expenditure going for a toss.
The state government borrowed an unprecedented ₹82,043 crore in 2023-24, taking its debt burden to ₹7.11 lakh crore, even as spending on development projects and capital expenditure decreased. The populist schemes announced by the Mahayuti government in the budget, with the additional burden of ₹96,000 crore, are expected to lead to further indiscipline in the state’s finances.
The Mahayuti government’s political priorities taking a toll on development work is evident from the spending on capital expenditure over the last few years, according to officials from the state finance department. For instance, in 2022-23, the government allocated ₹77,396 crore for capital expenditure, against which actual spending was ₹66,308 crore – 11% of the budget size of ₹6,00,498 crore. Similarly, in 2021-22, the allocation was ₹60,690 crore, while actual spending was just ₹49,106 crore. In 2020-21, the capex was just ₹32,029 crore, as against the provision of ₹43,828 crore.
“Lower spending on capital expenditure means lesser creation of the assets. It also leads to lowering the income and borrowing capacity of the state,” said a former finance department official.
“The thrust of the government over the last two years was on development works in the constituencies of ruling MLAs and cash benefits to select sections of the society to woo them for political benefits. For instance, in 2023-24, the supplementary budget of ₹1.05 lakh crore was mostly spent on MLAs, resulting in a revenue deficit and higher borrowing. Higher borrowings would not be a problem if the amount is spent on the development, but it does not seem to be happening,” the official added.
Another official from the finance department said that the additional burden of ₹96,000 crore to be spent on populist schemes announced in the budget is even more than the natural growth in revenue collection.
“Our estimated revenue collection is ₹4.99 lakh crore for FY25 from ₹4.49 lakh crore in FY24, as the natural growth is estimated to be 12% year-on-year,” the official said. “This also means that the spending on sops is more than the natural growth of ₹50,000 crore in revenue. This clearly means that the remaining amount has to be diverted from the development funds or by raising more loans.”
The central government’s PM Kisan initiative, under which 9.4 million farmers are given up to ₹6,000 each per year as minimum income support, already burdens the state exchequer with ₹5,500 crore. The additional burden of ₹46,000 crore towards the Mukhyamantri Majhi Ladki Bahin Yojana, under which women will be given a monthly allowance of ₹1,500, “will cripple the state budget at least for the next few years,” the official added.
The official also pointed out that the spending on the interest payouts is ₹56,727 crore, or 11.36% of the state’s revenue. “The state spends 58% of its revenue on salaries, pensions and interest, leaving no room for the expenditure on the development works.”
Rupesh Keer from Samarthan, an NGO that studies the state budget, said there are hardly any changes in the figures compared with those in the interim budget presented in February. “The expenditure on populist schemes takes a heavy toll on the capital expenditure and asset generation. If this continues for the next few years, the state’s debt-raising capacity will be exhausted. The state government does not seem to be serious on this.”
A retired IAS officer said, “It has become a fashion in the country to use the state revenue for political benefits. This leads to fiscal indiscipline, which is very dangerous in the long run. Unfortunately, the officials responsible for maintaining the discipline fall prey to the political pressure.”
The fiscal indiscipline has led to a rise in the percentage of fiscal deficit against the Gross State Domestic Product (GSDP) from 1.85% in 2022-23 to 2.77% in 2023-24. Similarly, the debt stock percentage against GSDP has increased to 18.35% in 2024-25 from 17.26% in 2022-23 and is expected to touch 18.91% in 2026-27, according to the figures released by the government in the budget books.
The annual GSDP at current prices for 2024-25 is expected to grow by 5.53% to ₹42,67,771 crore, as against ₹40,44,251 crore recorded in 2023-24.
