Mumbai: The Comptroller and Auditor General (CAG) has raised serious concerns over Maharashtra’s fiscal transparency, revealing that the State had accumulated off-budget borrowings amounting to Rs 28,325 crore as of March 31, 2025, which were not reflected in the official Budget documents.

In its latest audit report, the CAG observed that the omission of these liabilities understated the State’s actual debt burden, limiting legislative scrutiny and raising concerns over transparency and inter-generational fiscal equity.

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The report noted that while Maharashtra’s Finance Accounts showed outstanding public debt and other liabilities at Rs 8,59,097 crore, the inclusion of off-budget borrowings would increase the State’s effective liabilities to Rs 8,87,422 crore.

According to the audit, these borrowings were largely raised by government-owned entities and Special Purpose Vehicles (SPVs) on behalf of the State Government. Since repayment of the principal and interest is ultimately borne through budgetary allocations, the liabilities effectively rest with the State exchequer despite not being disclosed in the Budget.

The Maharashtra State Road Development Corporation (MSRDC) accounted for the bulk of such borrowings. The corporation raised Rs 18,440 crore during 2024-25, Rs 7,700 crore in 2023-24 and Rs 2,500 crore in 2022-23 through loans from the Housing and Urban Development Corporation (HUDCO), backed by State Government guarantees.

The CAG pointed out that the Finance Department’s sanction conditions require the State Government to make annual budgetary provisions for repayment of the loans, including principal, interest and other charges, making them a direct financial obligation of the government.

The report stated that under the Maharashtra Fiscal Responsibility and Budgetary Management (MFRBM) Act, 2005, and the corresponding Rules of 2006, off-budget borrowings are liabilities serviced through the State Budget even though they are raised outside the Consolidated Fund by government-controlled entities.

“Creating such liabilities without disclosing them in the Budget raises concerns over transparency and inter-generational equity,” the audit observed, adding that these borrowings neither form part of the Budget disclosure statements nor receive legislative approval, thereby restricting comprehensive oversight by the Legislature.

Based on Maharashtra’s estimated Gross State Domestic Product (GSDP) of Rs 45.31 lakh crore, the revised outstanding liabilities work out to 19.58 per cent of the GSDP, the report noted.

Apart from highlighting the hidden debt, the CAG also expressed concern over the State’s deteriorating fiscal position. Although Maharashtra maintained its fiscal deficit within the statutory ceiling at 2.74 per cent of GSDP, the revenue deficit widened sharply to Rs 29,994.76 crore, indicating an increasing reliance on borrowings to finance day-to-day expenditure instead of creating productive assets.

The audit further observed that 63.45 per cent of the State’s revenue receipts were absorbed by committed expenditure, including salaries, pensions, interest payments and subsidies, leaving limited fiscal space for developmental spending.

The CAG also criticised the practice of parking substantial unspent funds in Virtual Personal Deposit Accounts and the bank accounts of Drawing and Disbursing Officers (DDOs), stating that it distorted the State’s expenditure and deficit figures by artificially inflating spending without actual utilisation.

The findings relate to the 2024-25 financial year, during which Eknath Shinde served as Chief Minister for most of the period, while Devendra Fadnavis held the Finance portfolio before taking over as Chief Minister following the Assembly elections in November 2024. Fadnavis continues to oversee the Finance Department.