Mumbai: Maharashtra government has proposed to raise nearly Rs 1.9 lakh crore in loans in the year 2025-26 of which Rs 1.5 lakh crore or 78.1% is to be raised from the open market. This constitutes nearly 73.4% of the fiscal deficit, states the Medium-Term Fiscal Policy Statement and the Fiscal Policy Strategy Statement.In addition, various government undertakings, corporations, special purpose aid companies, and cooperatives have to raise loans for building infrastructure, for which the state government provides guarantees. The total outstanding guarantee given in 2025-26 is Rs 1.8 lakh crore and in case of failure of the guarantee, the entire responsibility lies with the state government.The statement observed that there is a significant increase in state’s liabilities due to investments in infrastructure and communication projects, but for 2025-26, the target fixed for the fiscal deficit as a percentage of the Gross State Domestic Product (GSDP) has been achieved. Government is permitted to undertake annual borrowings within the limit of 3% of GSDP.The strategy statement stated that as per the projections for the year 2025-26, Maharashtra’s economy is expected to grow by 7.9% as compared to 2024-25, while the national economy is expected to grow by 7.4%. “It is expected to maintain the direction of fiscal policy such that the growth rate of the state’s economy remains permanently higher than that of the national economy. The state is focusing on infrastructure and communication projects, which have far reaching implications for medium to long-term economic growth and employment generation,” reads the strategy statement. Capital investment is being increased in the state to achieve a $1 trillion economy and Maharashtra needs to raise debt for development work.The strategy statement also pointed out that the government is taking various measures to reduce the amount of interest through efficient debt management, including measures like raising and reissuing short-term and long-term debt securities. “Reserve Bank of India has formulated the Medium Term Debt Management Strategy for Maharashtra for easy management of debt portfolio risk, reduction of long term financial risk, strengthening of fiscal policy and proper functioning of the government bond market. The state government has agreed to accept the said policy,” reads the statement. Also, local self-government bodies, authorities and government depts have been instructed to return the unspent funds to the government.Increasing urbanisation is being touted as the reason for the strain on the state’s financial system as it has led to increasing electricity demand, water supply, housing demand, transport system and other infrastructure facilities.“The state has been successful in keeping debt within the prescribed fiscal indicators by achieving a balance between deposits and expenditure. Keeping the financial health of the state sound will be the direction of the fiscal policy of the state government. The state’s fiscal policy will help take the state’s economy to $1 trillion by 2029-30 and $5 trillion by the nation’s centennial year,” reads the statement.
