Maharashtra Budget: Budget will decrease by 20% due to Ladki Bahin scheme and debt burden, increasing pressure on state treasury

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Due to the beloved sister scheme and the increasing debt burden, the financial structure of the state of Maharashtra has been disrupted, significantly impacting this fiscal year's budget. As a result, there has been a cut of up to 20% in the distribution of funds in the budget. There has been a direct 5% reduction in employee salary expenses, which may lead to delays in salary distribution. Cuts have also been made in areas such as office expenses, overtime allowances, and machinery repairs, with overall other expenses reduced by an average of 5 to 20%. The finance department issued a circular regarding this today.

Before the assembly elections, a decision was made to cut revenue and capital expenditure by 30 percent. Now, due to insufficient funds for expenses, strict limits have been imposed on fund distribution for capital and revenue account targets. Instructions have been given to submit a concrete proposal for fund distribution for foreign travel, awards, publications, computer purchases, other administrative expenses, advertising-publicity, small constructions, consultancy services, motor vehicles, major constructions by February 12.

However, some expenses have been given full exemption. 100 percent funds have been distributed for pensions, loans and advances, loan repayments, scholarships, stipends, inter-account transfers. To avoid dissatisfaction among legislators, full funds have also been allocated for the MLA Local Development Program.

According to the finance department's circular, the process of finalizing the revised budget for the year 2025-26 is underway. Until the revised budget is finalized, funds will be distributed only for necessary expenses and will be provided through the budgetary estimate allocation control system. The structure of the cuts is such that the fund distribution for employee salaries has been brought to 95 percent. For office expenses including telephone, electricity, and water bills, the fund has been limited to 80 percent. There has been a 10 percent cut in the expenses for labor and contractual services.

This decision is likely to create discontent among government employees and departments. Although the state government has taken this step as a measure to address the financial crisis arising from pension schemes, there is concern that it will significantly impact development works and administrative processes. This cut will remain in place until the revised budget arrives, and departments will now have to undertake strict financial planning.