The state government had informed the legislature that its fiscal deficit stood at Rs 1,24,208.74 crore, equivalent to 2.74 per cent of the Gross State Domestic Product (GSDP), while the revenue deficit was reported at Rs 29,994.76 crore, or 0.66 per cent of GSDP.
However, the CAG's post-audit assessment found that after accounting for off-budget borrowings, incorrect classification of expenditure, and unpaid liabilities, Maharashtra's actual fiscal deficit increased to Rs 1,44,926.46 crore, representing 3.20 per cent of GSDP. The revised revenue deficit also rose to Rs 36,342.29 crore, or 0.80 per cent of GSDP.
The revision carries major fiscal significance because the FRBM Act mandates that states must keep their fiscal deficit below 3 per cent of GSDP to ensure responsible financial management and prudent borrowing. According to the audit, Maharashtra crossed that statutory limit after all financial liabilities were brought into the official accounts.
The CAG stated that Maharashtra's fiscal position has steadily deteriorated over the past five years. The state's gross fiscal deficit nearly doubled from Rs 71,558 crore in 2020-21 to Rs 1.24 lakh crore in 2024-25. The deterioration was driven by persistent revenue deficits, rising capital expenditure, and increasing net loans and advances.
The audit further observed that the state government has become increasingly dependent on borrowings and other financing instruments to bridge the widening gap between its income and expenditure.
A major reason behind the revised fiscal position was the inclusion of Rs 18,440 crore in off-budget borrowings undertaken through the Maharashtra State Road Development Corporation (MSRDC) during 2024-25. According to the CAG, these borrowings were raised from the Housing and Urban Development Corporation (HUDCO) against a state government guarantee but were excluded from the state's fiscal deficit calculations despite the government's responsibility to repay both the principal and interest through budgetary allocations.
The audit report stated that MSRDC raised Rs 2,500 crore in 2022-23, Rs 7,700 crore in 2023-24, and Rs 18,440 crore in 2024-25. As of March 31, 2025, the outstanding off-budget borrowing had reached Rs 28,325 crore.
After incorporating these borrowings, Maharashtra's total outstanding public debt and other liabilities increased from Rs 8.59 lakh crore, as reported in the Finance Accounts, to Rs 8.87 lakh crore. The state's outstanding liabilities also increased to 19.58 per cent of GSDP after the off-budget debt was included.
The CAG also identified several accounting irregularities that further understated the state's fiscal deficit. These included Rs 4,069.91 crore resulting from incorrect classification between revenue and capital expenditure, Rs 762.49 crore due to non-adjustment of interest against the Reserve Fund and Deposit-bearing Interest, and Rs 1,515.23 crore arising from the non-transfer of cess, fees, and surcharge.
According to the audit, these accounting adjustments increased the revenue deficit by Rs 6,347.63 crore and the fiscal deficit by Rs 20,717.72 crore, resulting in the revised post-audit figures.
The audit further found that the state government classified Rs 1,456.48 crore in interest payments and Rs 250 crore in loan repayments related to MSRDC's off-budget borrowings as capital expenditure on roads and bridges. The CAG concluded that these payments did not create any new roads, bridges, or other public assets, meaning the state's capital expenditure was overstated.
The CAG concluded that Maharashtra's growing reliance on extra-budgetary borrowings bypasses the normal budgetary framework, understates the state's fiscal deficit and public debt, and is inconsistent with the transparency and accountability principles laid down under the Maharashtra Fiscal Responsibility and Budget Management Act. The audit findings indicate that the state's actual financial obligations are substantially higher than those presented in the official accounts, raising serious concerns about fiscal transparency, statutory compliance, and long-term debt sustainability.
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