Maharashtra to face fiscal pressure due to BJP's poll promises
What's the story
The Bharatiya Janata Party-led Mahayuti alliance's election pledges are likely to put fiscal pressure on Maharashtra in FY 2025.
The alliance, which swept the recent state assembly elections with 236 out of 288 seats, has made some major commitments.
This includes increasing monthly financial aid for women under the Ladki Bahin Yojana from ₹1,500 to ₹2,100.
Fiscal impact
Election promises could inflate state's expenses
Economist Gaura Sen Gupta from IDFC First Bank told Moneycontrol that this hike could add an extra ₹5,600 crore to the state's expenditures by March 2025.
The Mahayuti alliance's manifesto also proposes a new unemployment benefits scheme and increased cash transfers for women and farmers.
These commitments are expected to cost Maharashtra an additional ₹9,000 crore in FY25 and over ₹35,000 crore in the next fiscal according to an analysis by the publication.
Deficit concerns
Fiscal deficit may exceed target due to election promises
The implementation of these schemes could take Maharashtra's fiscal deficit beyond its target of 2.6% of GSDP, possibly to a record high of 2.8%.
This could negatively impact the state's capital expenditure, with possible cuts resulting in a fall in infrastructure spending.
Despite these fiscal challenges, the Mahayuti alliance's win is likely to stabilize Maharashtra's political landscape and boost infrastructure development.
Electoral strategy
Election promises key to BJP-led alliance's success
The BJP-led alliance's success can be partly attributed to pre-poll promises such as the Ladki Bahin Yojana, which have proven influential in recent elections across India.
Emkay Global Financial Services noted that such schemes have been instrumental in winning elections over the last 18 months.
However, economists caution that keeping the fiscal balance will be difficult as these promises are fulfilled.