MUMBAI: Maharashtra’s economy continued to outpace much of the country in 2024-25, but the state’s finances are coming under increasing strain as rising revenue expenditure, mounting committed liabilities and persistent weaknesses in budget management threaten the government’s ability to invest in public infrastructure and essential services, according to the Comptroller and Auditor General’s (CAG) State Finances Report.In its review of the state’s finances and budgetary management, the CAG said Maharashtra’s strong Gross State Domestic Product (GSDP) growth and higher-than-national per capita income provide a solid economic base.However, the audit cautioned that the increasing revenue deficit, high committed expenditure and growing liabilities could force the government to rely more heavily on borrowings to finance development projects, affecting long-term fiscal sustainability.The report noted that while Maharashtra remained within the Fiscal Responsibility and Budget Management (FRBM) limits for fiscal deficit and debt, its revenue deficit widened significantly, meaning a larger portion of government borrowings is being used to meet day-to-day expenditure rather than creating productive assets.The CAG observed that undischarged liabilities exceeding ₹27,184 crore could further worsen both the revenue and fiscal deficits.For ordinary citizens, the trend assumes significance because a larger share of tax revenues is increasingly being consumed by salaries, pensions, interest payments and subsidies, leaving relatively less fiscal space for new roads, hospitals, schools, water supply and other capital works.The audit found that committed expenditure, comprising salaries, pensions and interest payments, stood at ₹2.49 lakh crore, accounting for 51.81% of the state’s revenue receipts during 2024-25.Although this proportion has declined from earlier years, the CAG said it continues to constrain fiscal flexibility and called for greater prioritisation of productive capital expenditure.Subsidies also continued to rise sharply.Total subsidies increased 16.72% to ₹56,089.18 crore, driven mainly by higher electricity tariff subsidies for agricultural pump consumers and support for cotton, soybean and oilseed cultivation. While these schemes support key sectors, the audit stressed the need to ensure that such expenditure remains fiscally sustainable.Chapter II of the report points to persistent shortcomings in budget execution.The CAG found repeated instances of excessive supplementary grants, large savings under several departments despite additional allocations, injudicious reappropriation of funds, delayed surrender of unspent allocations and substantial expenditure concentrated in the final month of the financial year.Such practices reduce the effectiveness of legislative control over public spending and weaken the credibility of budget estimates.The audit also highlighted cases where supplementary provisions turned out to be unnecessary or excessive, indicating weaknesses in expenditure forecasting.In several grants, departments surrendered large amounts only at the end of March, while in others, savings remained unutilised despite additional budgetary support.The CAG said more realistic budgeting and timely monitoring are essential for efficient use of taxpayers’ money.Another concern relates to expenditure bunching at the year-end.According to the report, significant spending was incurred during March 2025, a practice that can compromise financial discipline, reduce scrutiny of expenditure and affect the quality of project implementation.The audit also drew attention to pressures on local body finances. Against the Fifteenth Finance Commission’s recommendation of ₹1,391 crore for million-plus cities, no grant was released by the Centre during 2024-25, while the release made for urban local bodies pertained to withheld grants of the previous year.Maharashtra has six eligible urban agglomerations under this category, where grants are linked to improvements in air quality, drinking water and solid waste management.To improve fiscal health, the CAG has recommended strengthening revenue mobilisation, improving expenditure planning, reducing the revenue deficit, containing committed expenditure, enhancing allocative efficiency and ensuring more realistic budget estimates.It also called for better monitoring of supplementary grants, timely surrender of savings, avoidance of year-end spending spikes and greater focus on capital investment to support long-term economic growth.
