The Comptroller and Auditor General (CAG) has found that Maharashtra's actual fiscal deficit for 2024-25 breached the Fiscal Responsibility and Budget Management (FRBM) Act's 3% limit, contrary to what the state government reported in its Finance Accounts.
The government informed the legislature that its fiscal deficit stood at Rs 1,24,208.74 crore (2.74% of Gross State Domestic Product) and its revenue deficit at Rs 29,994.76 crore (0.66% of GSDP).
However, the CAG's post-audit assessment found that after accounting for off-budget borrowings, incorrect classification of expenditure and unpaid liabilities, the state's actual fiscal deficit rose to Rs 1,44,926.46 crore (3.20% of GSDP), while the revenue deficit increased to Rs 36,342.29 crore (0.80% of GSDP).
The revision is significant because the FRBM Act requires states to keep their fiscal deficit below 3% of GSDP to ensure prudent borrowing. According to the audit, Maharashtra crossed that threshold after all liabilities were brought on record.
The CAG said the state's fiscal position has steadily weakened over the past five years. Gross fiscal deficit nearly doubled from Rs 71,558 crore in 2020-21 to Rs 1.24 lakh crore in 2024-25, driven by persistent revenue deficits, rising capital expenditure and increasing net loans and advances.
The audit also noted that the government has become increasingly dependent on borrowings and other financing instruments to bridge the widening gap between its income and expenditure.
Off-Budget Borrowings
The single biggest adjustment made by the CAG was Rs 18,440 crore of off-budget borrowing undertaken through the Maharashtra State Road Development Corporation (MSRDC) during 2024-25.
These borrowings, raised from HUDCO against a state government guarantee, were not reflected in the state's fiscal deficit calculations even though the government is responsible for repaying the principal and interest through budgetary allocations.
According to the report, MSRDC raised Rs 2,500 crore in 2022-23, Rs 7,700 crore in 2023-24 and Rs 18,440 crore in 2024-25, taking the outstanding off-budget borrowing to Rs 28,325 crore as of March 31, 2025.
After including these borrowings, Maharashtra's total outstanding public debt and other liabilities increased from Rs 8.59 lakh crore reported in the Finance Accounts to Rs 8.87 lakh crore. Outstanding liabilities also rose to 19.58% of GSDP after accounting for the off-budget debt.
Other Accounting Issues
Besides off-budget borrowing, the CAG identified several accounting irregularities that understated the deficit:
- Rs 4,069.91 crore due to misclassification between revenue and capital expenditure.
- Rs 762.49 crore due to non-adjustment of interest against Reserve Fund and Deposit-bearing Interest.
- Rs 1,515.23 crore due to non-transfer of cess, fees and surcharge.
Together, these adjustments increased the revenue deficit by Rs 6,347.63 crore and the fiscal deficit by Rs 20,717.72 crore, leading to the revised post-audit figures.
The audit also found that the state showed Rs 1,456.48 crore in interest payments and Rs 250 crore in loan repayments on MSRDC's off-budget borrowings as capital expenditure on roads and bridges. The CAG said these payments did not create any new roads, bridges or other assets, meaning the state's capital spending was shown as higher than it actually was.
The CAG concluded that the increasing reliance on extra-budgetary borrowings bypasses the normal budgetary framework, understates the state's fiscal deficit and debt, and is inconsistent with the transparency principles laid down under the Maharashtra Fiscal Responsibility and Budget Management Act.
Essential Business Intelligence, Sharp Market Insights, Practical Personal Finance Advice, Daily Fuel, Gold and Silver Prices and Latest Stories — On NDTV Profit.