Mumbai: The spate of welfare schemes announced by the government in the run-up to the election is unlikely to dent the state’s financial position, a domestic rating agency said.
Icra Ratings’ chief economist Aditi Nayar also expects that there will not be a “runaway increase” in spending even though the “rhetoric may be very high”.
Concerns Raise
Concerns have been raised in the recent past over schemes like the Rs 46,000-crore Ladki Bahin Yojana of providing cash handouts to women or the decision to discontinue tolls for cars entering or exiting Mumbai.
The agency’s assistant vice president Neetika Shridhar said Maharashtra has a sizeable amount of fiscal space because it has not been doing a lot of welfare spending in the last few years.
“I don’t think so because of this recent announcement there will be any major hit to the state, at least in FY25,” she added.
Nayar explained that a government has to make a balancing act when it takes any decisions, that may put pressure on the finances and may opt either to roll back revenue spending or defer capital expenditure, just to balance the books. Additionally, there is also a possibility that the announcements do not necessarily go through from an implementation perspective. States used to resort to off-budget borrowings in the past, but that is not possible anymore because of the change in norms from the Centre, she added.
