Despite GSDP rise estimated at Rs 49.39 lakh cr in 2025-26, state faces challenge to challenge $1 tn economy target

Sanjay Jog

Maharashtra’s gross state domestic product (GSDP) is expected to be Rs 49,39,355 crore in 2025-26 from Rs 45,31,518 crore as per the revised estimate for 2024-25, a rise of 9 per cent. However, it will have to strive for achieving its ambitious target of US$1 trillion $3.5 trillion by the nation’s centennial year. According to the state’s Medium Term Fiscal Policy statement which was presented by Deputy Chief Minister and Finance Minister Ajit Pawar along with annual budget for 2025-26, the state government will need to further step up efforts for the implementation of the policy effectively to provide energy to the economy.

The policy statement has said that due to increasing urbanisation the state’s financial system is strained due to rising demand for electricity, water supply, housing, transportation and other infrastructure facilities putting additional pressure. The state government hopes to weather this challenge amid rise in its own tax revenue and non tax revenue. The state’s own tax revenue consists of State GST, state. AT, stamp and registration duty, state excise duty, tax on electricity, tax on vehicles, land revenue, professional tax, tax on goods and passengers, other taxes and duties. The revised estimate of own tax revenue for 2024-25 is Rs 3,67,467.23 crore while for the year 2025-26 the budget estimate for the same has been fixed at Rs 3,87,673.72 crore, an increase of 5.50 per cent.

The non tax revenue includes revenue received through interest, receipts, fines, fees, service charges, dividends,profits, royalties and deposits. The revised estimate of non tax revenue for 2024-25 is Rs 30,143.33 crore which is expected to grow to Rs 33,052.24 crore for 2025-26.

Further, the state is banking on the devolution from the Centre which is expected to be Rs 89,726.30 crore in 2025-26 against Rs 81163.34 crore. However, the state sees dip in grants in aid to Rs 50,511.36 crore in 2025-26 against Rs 57,692.35 crore. This puts pressure to further focus on the mobilisation of its own resources to make up the difference.

Despite government’s focus on giving a much needed push for development works, the policy statement has expected a decrease in capital expenditure to Rs 93,165.52 crore in 2025-25 from the revised estimate of Rs 1,09,031.48 crore for 2024-25. The policy statement underlines the time bound implementation of a slew of infrastructure projects in a time bound manner through various public undertakings, special purpose companies and municipal corporations while chasing the state’s ambitious target of US$1 trillion.

Furthermore, the ratio of revenue receipts to revenue expenditure in 2024-25 has marginally decreased from 98.09 per cent in the budget estimate to 92.44 per cent in the revised estimate.

According to the policy document, in 2023-24 the fiscal deficit was 2.24 per cent of GSDP which as per the budget estimate for 2024-25 was projected at 2.59 per cent of GSDP. However, as per the revised estimate it rose to 2.93 per cent. Considering the growth in the economy (7.3 per cent in 2024-25), the fiscal deficit for 2025-26 has been estimated to 2.76 per cent which is be,ow 3 per cent of GSDP as per the Fiscal Responsibility and Budget Management Act.

The revenue deficit in 2023-24 was 0.42 per cent of GSDP but according to the budget estimate for 2024-25 it was estimated at 0.47 per cent of GSDP but as per revised estimate it rose to 0.59 per cent of GSDP. The policy statement has stressed the need to reduce revenue deficit by increasing revenue receipts in 2025-26.

The policy statement has raised an alarm over rising administrative expenses including salaries, pension and interest payment the state government will have give more focus on prioritisation of expenditure, efficient management of public debt and effective management of limited resource to keep revenue expenditure under control. As per the budget estimate for 2025-26, the state’s outgo towards salaries will be Rs 1,72,000 crore against Rs 1,46,000 crore in 2024-25. The state will have to shell out Rs 75,137 crore for the payment of pension and Rs 64,659 crore for interest payment in 2025-26.