Maharashtra's off-budget borrowings rose to Rs 28,325 cr in 24-25: Audit report

Mumbai, Jul 10 (PTI) Maharashtra's off-budget borrowings have surged to Rs 28,325 crore, with the liabilities not being transparently reflected in the state's budget documents or accounts, resulting in an understatement of its effective debt burden and limiting legislative oversight, the State Finances Audit Report for 2024-25 said. Creating liabilities without disclosing them in the budget raises concerns over transparency and inter-generational equity, it said. During most part of the 2024-25 fiscal, Eknath Shinde was the chief minister of the state. The assembly elections were held in November 2024, and BJP leader Devendra Fadnavis, who was finance minister under Shinde, became the CM. Fadnavis also handles the finance department at present. Off-budget borrowing is a financing method where governments fund expenditures through public institutions or Special Purpose Vehicles (SPVs) rather than direct borrowing. The audit report said the Maharashtra State Road Development Corporation (MSRDC) raised loans of Rs 18,440 crore in 2024-25, Rs 7,700 crore in 2023-24 and Rs 2,500 crore in 2022-23 from the Housing and Urban Development Corporation Limited (HUDCO) against state government guarantees. The finance department's sanction conditions require the state government to make annual budgetary provisions for repayment of the principal, interest and other charges throughout the loan period, making these borrowings a direct liability on the state exchequer. Under the Maharashtra Fiscal Responsibility and Budgetary Management (MFRBM) Act, 2005, total liabilities comprise liabilities under the Consolidated Fund of the State and the Public Account. The MFRBM Rules, 2006 define off-budget borrowings as non-budgetary receipts serviced through the state budget, with repayments financed by government-owned or controlled public sector enterprises or departmental commercial undertakings raising resources on behalf of the government, the report said. According to it, creating such liabilities without disclosing them in the budget raises concerns over transparency and inter-generational equity, as these borrowings neither figure in the disclosure statements accompanying the budget documents and state accounts nor receive legislative approval. According to the audit, outstanding off-budget borrowings stood at Rs 28,325 crore as on March 31, 2025. While the Finance Accounts placed the state's outstanding public debt and other liabilities at Rs 8,59,097 crore, inclusion of these borrowings raises the effective liabilities to Rs 8,87,422 crore. With Maharashtra's Gross State Domestic Product estimated at Rs 45,31,518 crore, the revised outstanding liabilities work out to 19.58 per cent of the GSDP, the report noted. The audit report said the non-disclosure of such borrowings in budget documents and accounts understates the state's effective fiscal liabilities and restricts comprehensive legislative scrutiny of its debt position. It also flagged broader concerns over the state's fiscal health, noting that although the fiscal deficit remained within the Fiscal Responsibility and Budgetary Management ceiling at 2.74 per cent of GSDP, the revenue deficit widened sharply to Rs 29,994.76 crore, indicating a growing dependence on borrowings to finance current expenditure rather than asset creation. The report further said Maharashtra's expenditure remained heavily skewed towards committed spending, including salaries, pensions, interest payments and subsidies, which together accounted for 63.45 per cent of revenue receipts. It also pointed to large unspent balances parked in Virtual Personal Deposit Accounts and Drawing and Disbursing Officers' bank accounts, saying the practice artificially inflated expenditure and deficit figures. PTI ND NP