The financial structure of Maharashtra appears to have collapsed due to the increasing financial burden of the state government's 'Ladki Bahin' scheme and overwhelming debt. This has directly impacted the budget of the current financial year, and the finance department has decided to make significant cuts in fund distribution. In this regard, the finance department issued an official circular today. Due to insufficient funds in the state treasury, expenses in various departments of the budget have been cut by up to 20 percent. Notably, there has been a direct five percent cut in the funds for government employees' salaries, which is likely to delay salary distribution.
Reduction from Office Expenses to Machinery
Not only salaries, but limits have been imposed on many other expenses including office expenses, overtime allowances, and maintenance-repair of machinery. An average reduction of five to twenty percent has been made in the regular and administrative expenses of various departments. In the backdrop of the assembly elections, the government had already decided to cut revenue and capital expenditure by 30 percent. However, now due to the unavailability of necessary funds for actual expenses, the finance department has imposed strict limits on fund distribution according to the targets in the capital as well as revenue accounts.
Instructions to Submit Concrete Proposals for Expenses
If funds are needed for foreign tours, awards, publications, computer and IT expenses, advertising-publicity, administrative services, small and large constructions, contractual services, and purchase of motor vehicles, the concerned departments should submit concrete proposals by February 12, as clearly instructed by the finance department.
Full Funding for Certain Items
Meanwhile, 100 percent funding has been distributed for pensions, loans and advances, loan repayments, scholarships, stipends, and inter-account transfers. Along with this, full funding has also been provided for the MLA Local Development Program, and the government's effort to avoid dissatisfaction among MLAs is evident.
Priority to Essential Expenses
The process for the revised budget for the year 2025-26 has begun, and until then, funds will be distributed only for essential expenses. The finance department's circular states that limited approval for fund distribution has been granted through the budgetary estimate allocation control system.
Key Points of the Cut
The fund distribution limit for employee salaries has been brought to 95 percent, with a five percent reduction.
Only 80 percent of funds will be provided for electricity, water, telephone, and office expenses.
There has been a ten percent reduction in expenses on wages and contractual services.
Finance portfolio with the Chief Minister? Who will present the budget?
After the demise of Deputy Chief Minister and Finance Minister Ajit Pawar, it is speculated that Chief Minister Devendra Fadnavis might keep the finance portfolio with himself. Considering the state's financial crunch and the promise of farmer loan waiver by June 30, discussions are intensifying about this portfolio going directly to the Chief Minister. Meanwhile, the budget for the financial year 2026-27 is expected to be a major challenge for the Mahayuti government, and there is a strong possibility that Chief Minister Devendra Fadnavis will present the budget himself on March 6.