Mumbai: The Maharashtra state cabinet has approved substantial funds for major infrastructure projects across Mumbai, despite concerns raised by the state’s finance department over a growing fiscal deficit of Rs 2 lakh crores. This gap between Maharashtra’s earnings and spending continues to widen, with increasing investments in large-scale projects and welfare programs putting a heavy strain on the state’s finances.
Key projects such as the Thane-Borivli tunnel and Orange Gate-Marine Drive tunnel were greenlit earlier this week, with the government overlooking the finance department’s warnings about overspending. This decision has placed Maharashtra in a precarious financial situation, with the fiscal deficit now a major concern for the upcoming financial year (FY 2024-25).
Maharashtra Fiscal Deficit
The finance department has repeatedly cautioned state authorities, alerting them to the escalating gap between revenue and expenditure. They estimate that Maharashtra could face a severe cash crunch in the coming months if additional expenditures continue without careful management. The fiscal deficit is now exceeding 3% of the state’s GDP, violating the borrowing limits as set under Article 293, which restricts states from borrowing more than 3% of their GDP.
One of the factors contributing to the state’s fiscal strain includes the government’s pre-roll sops, further burdening the budget. As the fiscal deficit surpasses Rs 2 lakh crores, it has been made clear that Maharashtra will not be able to meet this deficit through additional borrowing, as it exceeds the limit.
The state cabinet’s approval of an interest-free subordinate loan of Rs 1,354 crore for the Orange Gate-Marine Drive tunnel and similar loans for the Thane-Borivli tunnel have raised further concerns. The finance department also warned against additional financial liability for the Thane Circular Metro Project, estimated at Rs 4,514 crore.
In July, despite warnings from the finance department about the fiscal deficit already hitting Rs 1.1 lakh crore, the government introduced supplementary budgetary demands worth around Rs 95,000 crore. This further increased the fiscal deficit, leaving Maharashtra unable to address the shortfall through tax collection alone.
Moreover, the finance department stressed that if the MMRDA (Mumbai Metropolitan Region Development Authority) takes on any additional loans for future projects, it must repay them from its own revenue, as the state government will not be able to support further financial liability.
Maharashtra’s state cabinet has approved key infrastructure projects like the Thane-Borivli and Orange Gate-Marine Drive tunnels, even as the state faces a growing fiscal deficit exceeding Rs 2 lakh crores. Biz News Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
