Amid a record-breaking debt of Rs 9.32 lakh crore and the ambitious goal to reach a one trillion dollar economy by 2030 and five trillion dollar under Viskit Maharashtra 2047 mission, Maharashtra Chief Minister Devendra Fadnavis, who holds the planning and finance departments, will on Friday present the state’s annual budget for 2026-27.
The chief minister will have to navigate a high-stakes tightrope walk as the budget is expected to be on the “Reform over Rhetoric” — trying to maintain investor confidence while managing the social cost of a rural economy facing climate-induced distress and stagnant MSP demands.
Although the state continues to be India’s growth engine with the projected growth rate of 7.9 per cent in 2025-26, it is under significant financial strain, primarily due to rising liabilities and a push for massive infrastructure spending. As part of higher public debt, the government strives to keep the fiscal deficit below 3 per cent of GSDP, adhering to the Fiscal Responsibility and Budget Management (FRBM) Act and revenue deficit below one per cent.
The chief minister is likely to focus on adhering to fiscal management and prudence while not neglecting the necessary allocation to welfare schemes and higher outgo on the capital expenditure needed to build assets.
A significant portion of the budget — estimated at Rs 60,000 crore — is locked into three major flagship schemes. These are seen as non-negotiable despite the fiscal pressure. Ladki Bahin Yojana: Monthly allowance of Rs 1,500 for eligible women (Rs 36,000 crore annual burden), Namo Shetkari Yojana: An annual grant of Rs 6,000 to farmers, matching the Centre’s payout, and the Free Electricity for Farmers: A commitment to provide free power to over 40 lakh farmers using pumps up to 7.5 HP until 2029.
To balance populist spending, the state is relying on heavy capital expenditure, bolstered by Rs one lakh crore in Central tax devolution and special project provisions on a slew of projects, including high-speed corridors, metro expansion and development of Tier II and Tier III cities.
The chief minister has already talked about taking hard decisions, which are expected to be seen in today’s budget.
To balance the Rs 60,000 crore annual burden of populist schemes with the need for fiscal discipline, the chief minister is likely to pivot towards structural efficiency rather than tax hikes. The government has already started pruning the Ladki Bahin Yojana beneficiary list, reducing it from 24.5 million to 22.5 million and using AI and Aadhaar-linked cross-verification with Income Tax and GST data to automatically disqualify ineligible claimants. This weed-out process may save the state Rs 3,000 to Rs 5,000 crore annually without technically reducing the scheme’s scope for the truly needy.
Rather than relying solely on tax revenue, CM Fadnavis may explore the “Asset Recycling” option. The government may consider leasing out underutilised government land, prime real estate in Mumbai/Pune, or selling Transferable Development Rights over government buildings. In addition, the government may look at future toll revenues from the Samruddhi Expressway and the upcoming Coastal Road to raise immediate capital for debt servicing.
Due to a favourable tax devolution formula, Maharashtra is set to receive a record Rs 98,306 crore from the Union Government. This “windfall” will likely be used to shield welfare schemes from being cut. The CM has a unique opportunity to offload major infrastructure costs onto the Union Budget, freeing up state-level Tax Revenue (OTR) to bridge the revenue deficit.
By focusing on these “back-end” reforms, the CM Fadnavis is expected to maintain the political goodwill of the sops while preventing the state’s debt-to-GSDP ratio from spiralling further.
CM Fadnavis, who has often spoken of “transformative leadership”, is expected to showcase from this budget that the state can be both compassionate to its farmers and credible to its creditors.
