Key Points:
- Austerity Drive Announced: Maharashtra government initiates spending cuts across departments due to financial strain caused by populist schemes like Ladli Behan Yojana.
- Revenue Deficit Soars: The state faces a record revenue deficit of ₹45,891 crore and debt projection of ₹9.3 lakh crore for 2025-26.
- Ladli Behan Scheme’s Impact: The flagship welfare scheme costs ₹36,000 crore annually, consuming a significant portion of state resources.
- Strict Guidelines Issued: Departments must justify new proposals with detailed financial implications before presenting them to the cabinet.
Mumbai: The Maharashtra government has announced sweeping austerity measures to curb spending as the state’s finances buckle under the weight of populist schemes like the Mukhyamantri Majhi Ladki Behan Yojana (Ladli Behan Scheme). Chief Secretary Sujata Saunik issued directives to all departments, mandating strict scrutiny of expenditures and limiting unproductive spending. Departments must now provide detailed financial justifications for any new proposals before seeking cabinet approval.
The decision comes as the state grapples with its highest-ever revenue deficit of ₹45,891 crore and a staggering debt projection of ₹9.3 lakh crore for the fiscal year 2025-26. These figures highlight the financial strain caused by pre-election welfare programs and rising administrative costs.
Ladli Behan Scheme: A Double-Edged Sword
Launched in June 2024, the Ladli Behan Scheme provides ₹1,500 per month to over 2.53 crore eligible women in Maharashtra through direct benefit transfers (DBT). While the initiative has been credited with securing electoral success for the Mahayuti alliance in the 2024 Assembly elections, its annual cost of ₹36,000 crore has become a major burden on the state treasury.
Initially allocated ₹46,000 crore, the scheme’s budget was reduced this year amid growing concerns about fiscal sustainability. Critics have pointed out that administrative expenses alone account for ₹2,223 crore annually, raising questions about efficiency and duplication with existing welfare programs.
Revenue Challenges and Spending Cuts
Maharashtra’s financial woes are compounded by its rising debt stock, which has surged by 11% compared to last year. The fiscal deficit stands at ₹1.36 lakh crore, while committed expenditures like salaries, pensions, and interest payments consume 58% of revenue collection. This leaves limited room for discretionary spending on infrastructure and development projects.
To address these challenges, the government has announced spending cuts ranging from 5% to 30% across various sectors. Capital expenditure on roads, buildings, vehicles, and publicity will see a 30% reduction. Essential services such as arms and ammunition procurement and fuel costs will be trimmed by 20%.
Guidelines for Departments
In a circular issued Friday, Chief Secretary Saunik instructed departments to consolidate free schemes and avoid redundancy in welfare programs. Proposals for new initiatives must include details on administrative approvals, available allocations, liabilities incurred, and projected increases in departmental expenditure.
Departments must also seek prior approval from the Finance and Planning Department for any changes in financial burdens associated with ongoing schemes.
Political Fallout
The austerity measures have sparked criticism from opposition leaders like Uddhav Thackeray, who accused the Mahayuti government of failing to fulfill its election promises. Thackeray called the budget “bogus,” pointing out that pledges such as increasing Ladli Behan payouts to ₹2,100 per month remain unfulfilled.
Despite these criticisms, Chief Minister Devendra Fadnavis defended the budget as focused on sustaining existing initiatives while maintaining fiscal discipline. “The five-point agenda of agriculture, industry, infrastructure, employment, and social welfare remains our priority,” Fadnavis said during his budget speech.
Future Implications
As Maharashtra navigates its financial crisis, the success or failure of austerity measures will significantly impact governance and public welfare. While schemes like Ladli Behan have bolstered political support among marginalized groups, their long-term viability depends on sustainable fiscal management.
For now, Maharashtra faces tough choices between balancing its books and delivering on promises made during election campaigns a challenge that underscores the delicate relationship between populism and fiscal responsibility.
