Maharashtra to face fiscal pressure due to poll promises made by triumphant BJP-led Mahayuti alliance

The Mahayuti

Maharashtra is expected to face fiscal headwinds in financial year (FY) 2025 to fulfil promises made in the election manifesto after the Bharatiya Janata Party (BJP)-led Mahayuti alliance’s landslide victory in the state, an economist said.

He cited that the expected increase in the monthly financial assistance to women would lead to an additional drain on the state exchequer.

In the run up to the assembly polls, which were held on November 20 and the results declared on November 23, the Mahayuti alliance had promised to increase the cash transfer to financially needy women with an annual family income of less that Rs 2.5 lakh, up by 40 per cent to Rs 2,100 from the current Rs 1,500 per month.

“The fiscal cost of the scheme for women [Ladki Bahin Yojana] was partly included in the Maharashtra budget presented in June 2024, with monthly assistance of Rs 1,500. This is likely to be increased to Rs 2,100, which could result in additional cost of Rs 5,600 crore till March, 2025. There are chances that the fiscal deficit could overshoot 2.6 per cent of the Gross State Domestic Product [GSDP] target,” said Gaura Sen Gupta, an economist at IDFC First Bank.

Emkay Global, a research and investment firm, has published a report that concurred with Sen Gupta's observation. It said that the Mahayuti alliance win bodes well for Maharashtra because the victory consolidates Centre and state politics. The convergence allows a pick-up in stalled infrastructure development and other pending issues. “However, both authorities will see higher fiscal pressure from increased spending on financial assistance for women.” the report added.

A Moneycontrol’s analysis also showed that a daunting task awaits the new Maharashtra Chief Minister. The incoming government will have to find an additional Rs 9,000 crore to fulfil promises laid down in the election manifesto in FY25 and over Rs 35,000 crore in the next fiscal.

If implemented in January 2025, the new poll promises, which include a new unemployment benefits scheme, increased cash transfers to women between the age of 18 and 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 Accredited Social Health Activist (ASHA) and Anganwadi 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 sum will be spent on the Ladki Bahin Yojana, which is being touted as one of the big reasons for the Mahayuti alliance's stellar performance in the assembly polls.

The BJP-led alliance crossed 200-mark out of 288 seats in Maharashtra elections, bringing in renewed focus on infrastructure development.

This is the best-ever performance by a party/alliance in Maharashtra since 1990. The BJP has bettered its previous high of 122 seats won in 2014 assembly elections.

Emkay Global's report stated that with a BJP-led coalition in office—in both, Maharashtra and the Centre, consolidated political capital should allow for better focus on state-specific issues, as well as expedite infrastructure spending, which had fallen prey to the political exigencies.