Maharashtra Budget 2026: State debt likely to cross Rs 11 lakh crore in 2026-27 amid rising infrastructure and welfare spending

Government officials said the rising borrowing requirement is largely driven by increased spending on major infrastructure projects and social welfare programmes aimed at boosting economic growth and improving public services.

State debt more than doubles in eight years

Budget data indicates that Maharashtra’s debt burden has more than doubled over the past decade.

In 2018–19, the state’s debt stood at Rs 4,07,152 crore, which represented 16.1 per cent of the Gross State Domestic Product (GSDP).

Over the following years, the debt continued to rise steadily. It increased to Rs 4,51,117 crore in 2019–20, Rs 5,19,086 crore in 2020–21, and Rs 5,76,868 crore in 2021–22.

The upward trend continued with the debt reaching Rs 6,29,235 crore in 2022–23, Rs 7,18,507 crore in 2023–24, and Rs 8,40,247 crore in 2024–25. The latest estimates show the debt climbing to Rs 9,73,989 crore in 2025–26 and crossing the Rs 11 lakh crore mark in 2026–27.

Infrastructure spending driving borrowing

Officials said the increase in borrowing is closely linked to the state government’s aggressive push for infrastructure development.

Over the past few years, Maharashtra has invested heavily in metro rail projects, expressways, irrigation works and large urban infrastructure initiatives, particularly in the Mumbai Metropolitan Region (MMR).

These projects are expected to improve connectivity, strengthen economic activity and create employment opportunities across the state.

Welfare schemes also add to financial pressure

Alongside infrastructure spending, the government has expanded several welfare initiatives, which have also increased fiscal pressure.

Schemes such as the Mukhyamantri Majhi Ladki Bahin Yojana, which provides financial assistance to women, and subsidies and loan relief measures for farmers have contributed to higher government expenditure.

According to the budget documents, the state government will continue to rely on borrowing to meet its spending requirements in the coming years.

Borrowing expected to reach Rs 1.5 lakh crore

For the financial year 2026–27, Maharashtra is expected to raise around Rs 1.5 lakh crore through loans and other liabilities.

Most of this borrowing will come through state government bonds issued in the open market, while the remaining funds will be sourced from Central government loans and other financial institutions.

As borrowing increases, the cost of servicing the debt is also rising. The budget estimates that interest payments alone will reach Rs 70,055 crore in 2026–27.

Debt level still within fiscal limits

Despite the increase in borrowing, the state government maintains that Maharashtra’s debt remains within manageable limits relative to the size of its economy.

According to the Medium Term Fiscal Policy Strategy Statement presented with the budget, the government aims to keep the state’s debt below 25 per cent of the GSDP.

The debt-to-GSDP ratio is projected to be around 20.38 per cent in 2026–27, which is within the fiscal responsibility framework.

The fiscal deficit is also expected to remain under control, with projections indicating that it will stay between 2.7 and 2.9 per cent of GSDP over the next two years, below the 3 per cent limit set under fiscal rules.

Rising state borrowing a national trend

The increase in Maharashtra’s debt reflects a broader trend across several Indian states.

Following the COVID-19 pandemic, many large states such as Punjab, Rajasthan and West Bengal have witnessed a rise in borrowing due to increased spending on welfare programmes and infrastructure development.

According to assessments by the Reserve Bank of India (RBI), the combined debt of Indian states could remain between 28 and 30 per cent of the national GDP in the coming years.

However, officials note that Maharashtra’s large economy and relatively strong tax revenue base help maintain fiscal stability despite the rising debt levels.

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