Maharashtra’s achievements
Maharashtra is India’s economic powerhouse, contributing to 13.6% of the national GDP with a projected GSDP of INR 45L Cr in FY24-25205 and is targeting to become a USD 5Tn economy by 2047. The state exhibits a promising starting point to achieve this aspiration with a diversified and resilient economy, backed by robust public finance systems and institutional maturity:
Stable fiscal fundamentals: Maharashtra’s fiscal deficit is <3% of GSDP, comfortably within Fiscal Responsibility and Budget Management limits.
Strong GST performance: The state ranks first amongst all Indian states in terms of GST collections (INR 3L+ Cr in 2024)205. It also has one of the highest State’s Own Tax Revenue (SOTR) in India.
Lower debt burden: Maharashtra has one of the lowest outstanding debt to GSDP ratio at 19%205 vs national average of 25%+.
Active adoption of alternate financing: India’s first state-level InvIT approved; maiden green bond issuance of INR 200Cr by PCMC in 2023 for solarization/water recycling; PPPs in infrastructure (e.g., Mumbai Trans Harbour Link, Nagpur Metro).
Key opportunity areas
A. Unlock fiscal space: Maharashtra had 56% of its revenue receipts205 (or 6% of GSDP) committed to salaries, interest payments and pensions in FY24. Its subsidies outlay, already at INR 48K Cr FY23206, is also expected to grow. Opportunity to trim and redirect recurring spends toward developmental and capital investments. (refer Exhibit 1)
B. Raise investment productivity: Maharashtra’s public-investment Incremental Capital Output Ratio (ICOR) is estimated at 4.6207 (vs developed nation’s ICOR ranging between 2.5-3), sizeable cost and time overruns on major projects contribute to this. Opportunity to tighten project appraisal, digitize progress tracking and enforce outcome-based contracts, to lower ICOR and unlock faster growth with public investment.
C. Scale up alternative financing potential: Only a small share of Maharashtra’s infrastructure pipeline is currently financed through PPPs or blended models; opportunity to mobilize capital via alternate financing tools to address fiscal constraints and ensure innovation and efficiency in public projects