Mumbai, March 7: Even as Maharashtra reels under a debt burden of ₹9.73 lakh crore at the close of the current financial year, expected to cross ₹11 lakh crore next year, the state government has been unable to recover more than ₹2 lakh crore in pending tax revenue.
Rising liabilities add pressure on state finances
The fiscal outlook also reflects additional pressures, including state guarantees extended to public sector undertakings and off-budget borrowings. These liabilities add to the mounting burden of interest payments, along with rising expenditure on salaries, allowances and pensions.
The financial strain during the 2025–26 fiscal year was evident when the state availed an overdraft facility of ₹15,030 crore from the Reserve Bank of India (RBI).
Large portion of tax arrears under dispute
According to a statement released with the state budget presented in the legislature on Friday, ₹1.65 lakh crore of the total tax arrears is under dispute. Among the pending dues, ₹66,638 crore are more than one year old but less than two years old, while ₹50,009 crore have been pending for more than five years but less than 10 years.
An amount of ₹34,887 crore is not under dispute. Of this, about ₹13,365 crore has remained unpaid for more than five years but less than 10 years, while about ₹9,126 crore has been pending for more than one year but less than two years.
State guarantees to departments and undertakings
Another aspect of the state’s financial management is the guarantees extended to various departments and public undertakings. By the end of the 2024–25 fiscal year, the government had provided guarantees worth ₹1,29,458 crore to 10 state departments.
The largest guarantee, ₹51,905 crore, was extended to the Energy Department. Loans amounting to ₹39,100 crore have been guaranteed for entities under the Urban Development Department, while loans worth ₹33,640 crore have been guaranteed for the Public Works Department (PWD). The MSRDC has been a major borrower under the PWD.
Open market and off-budget borrowings rise
Budget documents show that ₹7.11 lakh crore of the state’s liabilities at the end of the current financial year consist of open market borrowings, up from ₹5.93 lakh crore in 2024–25.
Off-budget borrowings, often viewed as a controversial financial practice, are typically used to bypass borrowing limits and keep the fiscal deficit within prescribed levels. These borrowings are estimated to reach ₹29,272 crore by the end of the 2025–26 fiscal year.
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Outstanding payments to contractors
Despite the rising debt, seven state departments together owe ₹51,424 crore to contractors and suppliers involved in major construction works and procurement. The PWD alone accounts for ₹48,889 crore of these outstanding payments.
Budget papers also reveal that the government has set aside ₹5,566 crore as a lump-sum provision without specifying its purpose.
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