CAG Report Flags Maharashtra's Rising Off-Budget Borrowings For Debt Repayment

Mumbai: A troubling financial pattern is emerging in Maharashtra, where off-budget borrowings—intended to fund infrastructure and development—are increasingly being used to repay previous loans and clear arrears. This cycle of debt to service debt, bypassing legislative scrutiny, poses long-term fiscal risks, according to recent disclosures in the state legislature.

About The Documents Tabled

During the just-concluded Monsoon session, two crucial documents were tabled: the Comptroller and Auditor General (CAG) report for 2022-23 and a statement detailing state guarantees for loans raised by various state undertakings. Both highlight the growing reliance on loans not for capital creation, but for debt servicing—a trend that experts warn is fiscally unsustainable.

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The CAG report reveals that the Maharashtra State Road Development Corporation (MSRDC) raised ₹3,500 crore from HUDCO for land acquisition for the Pune Ring Road and another ₹2,140 crore for the Jalna-Nanded Expressway connector. These were funded through HUDCO, a central government entity. More strikingly, MSRDC Tunnels Ltd borrowed ₹17,500 crore from the Rural Electrification Corporation (REC) for prepayment of existing debts and to complete the missing link in the Mumbai–Pune Expressway expansion.

The state government has committed to provisioning repayments for these loans in the annual budget—effectively shifting private borrowings onto public shoulders. Between 2019-20 and 2023-24, the state earmarked only ₹65 crore for repaying off-budget loans. However, as per the CAG, an additional ₹10,135 crore must still be provisioned. The guarantee statement shows the state stands behind ₹62,568 crore worth of loans taken by entities such as MahaDisCom, MSRDC, the Mumbai Metropolitan Region Development Authority (MMRDA), and the Shabri Adivasi Vikas Mahamandal.

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MahaDisCom, for instance, borrowed ₹7,619.69 crore from REC, Power Finance Corporation (PFC), and HUDCO to settle dues owed to Maharashtra’s power generation and transmission companies. Another ₹27,849 crore was raised for paying power suppliers’ bills—again backed by state guarantees. The MSRDC also borrowed ₹15,000 crore via bonds from Mumbai Pune Expressway Ltd for land acquisition related to the Virar–Alibaug Multimodal Corridor.

Simultaneously, the MMRDA has taken a ₹12,000 crore loan from REC for ongoing infrastructure projects. Since these loans carry state guarantees, any default by the borrowing entities would force the govt to honour the repayments, pressuring the annual budget further. The CAG report issues a stark warning: borrowed funds should be used for development, not to plug holes in existing finances. Maharashtra spent ₹40,649 crore in 2023–24 alone— raised through borrowings—on repaying existing loans. This debt trap, if unchecked, could constrain the state’s ability to fund future growth.