Maharashtra's Financial Strategy: External Loans with Fiscal Caution

Maharashtra's government mandates departments to submit a preliminary project report for external loans approval. These loans must not be used as primary funding sources and should stay within fiscal deficit limits. Approval involves state cabinet and DEA screening, focusing on strategic project design and swift completion.

Maharashtra's government has issued a directive requiring all departments to submit a preliminary project report to the chief minister for approval of external assistance loans from funding agencies. This initiative aims to ensure that these loans are not primarily used to meet financial needs and remain within the state's fiscal deficit limits.

The state's Finance Department emphasized that loan agreements must receive approval from the state cabinet. The loans should remain under the constraints of the Fiscal Responsibility and Budget Management (FRBM) Act, ensuring that the fiscal deficit does not exceed 3% of the GSDP.

In addition, projects must pass through the central government's Department of Economic Affairs screening. The detailed project report should reflect strategic components including economic, ecological, and cultural factors. The government has managed to keep the fiscal deficit below 3% of GSDP, with revenue receipts exceeding Rs 5,60,000 crore.

(With inputs from agencies.)