Anita, who works as a maid in Mumbai, has been receiving Rs1,500 a month through the Mukhyamantri Majhi Ladki Bahin scheme, announced last July when the Mahayuti government led by Chief Minister Eknath Shinde was in power. With her husband earning limited wages at a garage, the amount helps her make ends meet.
Under the scheme, women aged 21 to 65, and whose family income does not exceed Rs2.5 lakh a year, are eligible for monthly payouts. Ahead of the assembly polls last November, the Mahayuti coalition―which includes the BJP, the Shiv Sena and the NCP―had promised to increase the amount to Rs2,100 a month if reelected. With the Mahayuti’s victory, women like Anita hoped for an increase. “We are still receiving Rs1,500 per month,” she said.
There is no allocation for the Ladki Bahin poll promise in the state budget presented by Deputy Chief Minister and Finance Minister Ajit Pawar on March 10. The budget also did not fulfil the promise of farm loan waivers. “We have suffered a lot because of crop damage from excessive rainfall last year,” said Shyam Ghoghre, a farmer from Ghansawangi in Jalna district. “We were to get compensation, but we got only promises, and little else.”
The fact is that Maharashtra’s fiscal situation gives Pawar little elbow room. The state’s revenues this year is expected to be Rs5.6 lakh crore, but its expenditure is budgeted to go up to Rs6.06 lakh crore. The revenue deficit―the gap between income and expenditure―is pegged at Rs45,892 crore, up 73 per cent from last year’s estimate.
This year, in his eleventh budget, Pawar has tried to strike a balance between spending on infrastructure development, job creation and welfare schemes, while also looking to maintain fiscal prudence. Infrastructure projects have received a big push―Rs64,000 crore has been earmarked for improving Mumbai’s road and transport network, and building tunnels linking Thane and Borivali, and Orange Gate and Marine Drive. A deep sea port is being developed at Vadhavan in Palghar district, and projects expected to be completed this year include the Navi Mumbai airport and the final phase of Mumbai-Nagpur expressway. Funds have been allocated for developing agro-logistics hubs along the expressway and upgrading the Nagpur and Shirdi airports. Also in the pipeline is a new industrial policy, targeting investments of Rs40 lakh crore and creation of 50 lakh jobs.
With focus on infrastructure and jobs, no new major welfare schemes were announced. The Ladki Bahin scheme was allocated Rs36,000 crore, Rs10,000 crore less than last year. This is in contrast to the conspicuously generous welfare spending ahead of the polls―for schemes like the Mukhyamantri Tirth Darshan Yojana, which provides senior citizens free tours to religious sites, and the Ladka Bhau Yojana, an apprenticeship scheme for the youth that provides Rs6,000 to Rs10,000 as stipend.
With the previous Mahayuti government having spent big on welfare schemes, Pawar is finding it difficult to deliver on poll promises like increasing the Ladki Bahin payouts. The state’s fiscal deficit this year is Rs1.36 lakh crore, up from last year’s estimate of Rs1.1 lakh crore. For the first time, debt will cross Rs9 lakh crore.
“With no elbow room, the government simply could not have spent Rs2,100 [per head on Ladki Bahin] or offered loan waivers,” said Prof Neeraj Hatekar of Azim Premji University.
M. Govinda Rao, economist and member of the 14th Finance Commission that made recommendations for the period 2015-2020, said the government appeared to be tightening its belt since the polls got over. “The budget doesn’t show healthy finances, but the government is trying to contain the deficit,” he said.
Goodwill ticket: Karnataka’s Transport Minister Ramalinga Reddy with beneficiaries of the Shakti bus travel scheme | Bhanu Prakash Chandra
Rao said every populist welfare scheme did not just widen the revenue deficit, but also force the government to incur “opportunity costs”―there is less money to spend on critical areas such as transport and infrastructure, which in turn leads to project delays and cost overruns. He pointed out that, despite the big infrastructure push, Maharashtra’s capital expenditure―money spent on infrastructure and other assets―were down 14 per cent from last year’s estimates. “The state’s revenue deficit is widening, and quite a large portion of borrowed money goes to fill this deficit,” he said.
Widening revenue deficit is a problem faced not just by Maharashtra, but also Karnataka and Telangana.
In Karnataka, Chief Minister Siddaramaiah recently tabled his sixteenth budget, allocating Rs51,034 crore for the state’s five flagship welfare schemes―Gruha Lakshmi (Rs2,000 a month to female heads of families), Gruha Jyothi (free electricity up to 200 units to 1.62 crore consumers), Shakti (free bus travel for women), Yuva Nidhi (unemployment benefits to 2.58 lakh youth) and Anna Bhagya schemes (10kg rice free of cost to 4.21 crore people).
According to Siddaramaiah, these schemes are not merely freebies, but strategic investments made on economic and social principles. “Our welfare schemes aim to increase people’s purchasing power; women empowerment is one approach to it,” he said.
But welfare schemes and subsidies, which cost Rs90,000 crore a year, have Karnataka’s finances under severe strain. The state’s revenue deficit this year is Rs19,262 crore, down from Rs27,354 crore last year but still falling short of the Fiscal Responsibility Management Act’s target to eliminate revenue deficits in state budgets.
The state has been trying hard to increase revenue receipts, but a sizeable chunk of the revenue (78 per cent) is still spent on salaries, subsidies and debt repayment. The salaries of ministers and MLAs have been hiked for the second time in two years, costing the state Rs62 crore. An additional Rs60 crore has been allocated for the appointment of 4,000 Congress workers to committees tasked with implementing welfare schemes.
Siddaramaiah said Karnataka will borrow Rs1.16 lakh crore this year to bridge its revenue deficit. The state’s public debt is expected to touch Rs6.06 lakh crore in 2025-26, with total liabilities expected to reach Rs10.18 lakh crore by 2028-29.
In Telangana, too, public debt is staggeringly high. In December 2023, when the Congress came to power in the state, the debt stood at Rs8.1 lakh crore. The government borrowed an additional Rs1.58 lakh crore (till February 2025), but Chief Minister Revanth Reddy said only around Rs4,000 crore was left after servicing debt. Currently, the state has an outstanding debt of Rs7.38 lakh crore. With Rs13,000 crore of the state’s monthly revenue receipts of Rs18,000 crore spent on salaries, subsidies and servicing debt, Telangana has little room for expenditures on infrastructure projects.
According to Reddy, the government has been struggling to pay salaries on time. In a recent gathering of state government employees, he said the government was forced to borrow Rs4,000 crore from the Reserve Bank of India in the previous months. He accused the Bharat Rashtra Samithi, which was in power earlier, of having worsened the state’s fiscal health. “I am trying to make Telangana’s sick body healthy again,” Reddy said.
Experts say the path forward is difficult. “The government’s massive borrowings have made a severe impact,” said Krishna Reddy Chittedi, associate professor at the School of Economics, University of Hyderabad. “The previous government struggled to fund salaries and welfare schemes, and the new government is facing similar challenges because of existing schemes and the fresh promises made during the poll campaign.”
Chittedi pointed out that the fresh loans taken by the government have not improved productivity or people’s income. “The financial situation has become precarious,” he said, “with little room left for development and welfare.”