Subsidies More Than Triple In Five Years, Strain Madhya Pradesh Finances: CAG

Bhopal (Madhya Pradesh): Subsidies in Madhya Pradesh have more than tripled over the past five years and more than doubled in 2024-25, putting pressure on the state's finances and limiting its ability to contain the fiscal deficit within the limits prescribed under the Fiscal Responsibility and Budget Management (FRBM) Act, according to the Comptroller and Auditor General's (CAG) report on State Finances for 2024-25.

The report says the state's revenue surplus declined significantly, leaving little room for fiscal consolidation. Madhya Pradesh's Gross State Domestic Product (GSDP) grew by 11.05% during 2024-25 and contributed 4.55% to the country's GDP. However, the state's share in the national GDP has been declining over the past five years, except in 2024-25.

Revenue receipts grew by 7.04%, compared with 14.73% in 2023-24. Non-tax revenue increased by 12.38%, while grants from the Centre declined. Although the state's own tax revenue improved, dependence on central grants remains substantial.

Revenue expenditure accounted for 78% of total spending, driven largely by committed expenditure and subsidies, leaving limited fiscal space for capital investment.

Subsidies rose by Rs 23,320 crore (114.49%) over the previous year. The increase included Rs 13,475 crore (253.55%) towards energy subsidy, Rs 6,670 crore for farmer welfare and agriculture development, Rs 1,510 crore for industrial policy and investment promotion, and Rs 1,144 crore for MSMEs. The CAG warned that rising subsidies reduce funds available for infrastructure and productive investment, increasing dependence on borrowings.

The report noted that 29.43% of total borrowings in 2024-25 were used to service past debt, leaving less for capital outlay. It also observed that debt has grown faster than the economy over the past three years.

During 2021-25, budget allocations increased every year, but expenditure never crossed 90% of the Budget. Departments surrendered Rs 20,620.16 crore on the last working day of the financial year, leaving no scope for reallocation.

Outstanding liabilities (2024-25)

Loan from GoI: Rs 66,345 crore

Internal debt: Rs 3,33,216 crore

Public account liabilities: Rs 68,874 crore

Off-budget borrowings: Rs 568 crore