CAG finds Maharashtra's fiscal deficit at 3.20%, breaching 3% limit in 2024-25
GS3Economy · S&T · Environment · Security· Fiscal policy, budget & taxation (GST)· Prelims + Mains·
Why in news
The CAG identified that Maharashtra's fiscal deficit for 2024-25 reached 3.20% of GSDP, exceeding the FRBM Act limit of 3% due to off-budget borrowings.
Background
The CAG audit revealed that off-budget borrowings through the Maharashtra State Road Development Corporation (MSRDC) added Rs 18,440 crore to the state's deficit. This discrepancy arose from the government's reported figure of 2.74% versus the audited 3.20% figure.
Facts for Prelims
- BodyCAG: The Comptroller and Auditor General of India is the supreme audit institution of the country.
- FactFRBM Act Limit: The Fiscal Responsibility and Budget Management Act sets a fiscal deficit limit of 3% of GSDP.
- FactMaharashtra Fiscal Deficit: Audited at 3.20% for the 2024-25 period.
- BodyMSRDC: Maharashtra State Road Development Corporation is a state-level body involved in infrastructure.
For Mains
Q. Discuss the implications of off-budget borrowings on state fiscal health and the challenges in maintaining fiscal discipline under the FRBM Act.
Dimensions to cover in your answer
- Transparency gap: Use of extra-budgetary financing to mask the true extent of state debt and deficit.
- Fiscal federalism friction: State-level infrastructure spending pressures vs. Central-mandated fiscal consolidation targets.
- Accounting irregularities: Misclassification of expenses and non-adjustment of costs leading to inaccurate fiscal reporting.
Keywords: Fiscal Deficit · FRBM Act · Off-budget Borrowings · Fiscal Discipline · Extra-budgetary Financing
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