A daunting task awaits the new chief minister of Maharashtra as the incoming government will have to find around Rs 9,000 crore extra to fulfil promises laid down in the election manifesto in FY25 and over Rs 35,000 crore in the next fiscal, according to a Moneycontrol analysis.
If implemented in January 2025, the scheme - the new poll promises which includes a new unemployment benefits scheme, increased cash transfers to women between the age of 18 to 60 and earning below Rs 2.5 lakh per annum, cash transfers of Rs 15,000 to all farmers under PM Kisan Yojana, increased wages to ASHA and Aanganwadi workers, increased old age and widow pension - will add Rs 8,807 crore to the state budget in the fourth quarter of the financial year. More than half of this will be spent on the Ladki Bahin Yojana, which is being cited as one of the big reasons for the BJP-led Mahayuti win.
How the numbers stack up?
The BJP-led Mahayuti, which won a thumping majority in the recently concluded elections, securing close to 80 percent of the 288 seats, had promised to increase the cash transfer to financially needy women with an annual family income of less that Rs 2.5 lakh, by 40 percent to Rs 2,100 per month from the current Rs 1,500 per month. It also guaranteed a similar increase in the old age pension scheme and unemployment benefit of Rs 10,000 per month to 1 million youth.
The new additions are expected to increase government spending by 0.2 percent, which, if not accommodated from cutbacks in other departments, will push the states’ fiscal deficit to its highest level ever of 2.8 percent of the GDP.
The Ladki Bahin Yojana, with an increased monthly outgo of Rs 2,100 per woman for 25.6 million women beneficiaries of the scheme, is expected to cost Rs 4,612 crore in the last fiscal, while the unemployment benefit will add Rs 3,000 crore to spending.
Another Rs 630 crore is likely to come from the increase in outlay for Namo Shetkari Mahasanman Nidhi Yojana (NSMNY), where the Mahayuti has promised Rs 15,000 per household, compared with Rs 12,000 (including Rs 6,000 from PM-KISAN) that is disbursed per annum.
State Finance Minister Ajit Pawar had announced that the first quarterly installment had gone to 8.5 million farmers.
The government had budgeted Rs 1.1 lakh crore as fiscal deficit for the current fiscal.
As a proportion of the revenue collections, the schemes are expected to cost 2.6 percent of the states’ own tax revenue receipts of Rs 3.4 lakh crore for FY25.
The overall revenue receipts for FY25 were budgeted at Rs 4.99 lakh crore.
Impact of Freebies
Economists estimate that capex will likely be a casualty in such a scenario.
“On aggregate, states’ (Maharashtra and Jharkhand) FY25 FD/GSDP will likely slip to 3.15 percent, with sharp cuts in capex to keep deficits under control,” said Madhavi Arora, chief economist, Emkay Global.
Moneycontrol had earlier reported that Maharashtra’s capital outlay was set to decline for the first time post Covid in FY25.
The state had budgeted Rs 85,292 crore in capital spending compared with Rs 85,657 crore spent in FY24.
If the Rs 8,807 crore hit is entirely absorbed by capex, it will put the state’s capex 10 percent lower than the previous fiscal year and one of the steepest declines across all states.
Maharashtra was one of the few states to witness capex contraction in FY25, as per NSE study of state finances.
The combined weight of the announced proposals in the FY26 budget will likely be over Rs 35,000 crore, with an additional Rs 18,000 crore accounted by Ladki Bahin Yojana and Rs 12,000 crore by unemployment benefits.
The total outlay on all schemes is expected to be Rs 91,026 crore, assuming no new beneficiaries are added, of which cash transfer to women would be Rs 64,652 crore.
If the state continues to grow at the current rate of around 6 percent, the additional expenditure will likely add 0.8 percent of the GDP to the state spending in the coming year.
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