Government Departments Seek Innovative Ways to Raise Funds Amid Fiscal Crunch

With the state government facing a significant financial strain and mounting debt, various government departments in Maharashtra have started looking for innovative ways to raise funds beyond the resources allocated in the state budget.

The forest department is planning to monetize its teakwood property to avail a ₹6,000-crore loan, while the water supply department is looking to raise ₹15,000 crore from the Housing and Urban Development Corporation (HUDCO). Additionally, the public works department (PWD) is clearing pending dues of road and infrastructure contractors through the Trade Receivables Electronic Discounting System (TReDS) with a 4% cut.

The pressure on state finances escalated in 2024 when the previous Mahayuti government announced a series of sops ahead of the assembly polls. In the 2025-26 state budget, the revenue deficit was pegged at ₹45,892 crore, and the fiscal deficit was ₹1,36,000 crore. The government allocated ₹36,000 crore for the Ladki Bahin scheme and ₹14,700 crore towards free electricity for farmers. The government had to table supplementary demands worth ₹1.44 lakh crore on three occasions during the fiscal year.

Sources in the state government revealed that more than 25,000 water supply projects were stalled as the central government denied Maharashtra funds for the Jal Jievan Mission. The department has now decided to secure a loan of ₹15,000 crore from HUDCO and route the money to projects that are at least 75% complete.

“We will raise money from HUDCO in a phased manner,” said Water Supply Minister Gulabrao Patil. “We are thinking of raising ₹5,000 crore in the first phase, and the funds will be used for projects which are at least 75% complete.”

Similarly, the forest department is looking to monetize teakwood property worth ₹12,000 crore created by the Forest Development Corporation of Maharashtra Ltd (FDCM). Last week, Forest Minister Ganesh Naik acknowledged the financial strain on the government due to the burden of various schemes like the Ladki Bahin Yojana.

“I will present a proposal soon to the state government regarding taking a ₹6,000-crore loan based on teakwood property worth ₹12,000 crore. I hope the cabinet will approve it,” said Naik. “After all, what is the use of this teakwood if it does not enable the department to carry out various works?”

The PWD, which owes around ₹22,000 crore to various contractors, is also working on a mechanism to expedite payment of arrears. The department has opted for the TReDS platform to clear dues of contractors with a 4% cut. Milind Bhosale, president of the Maharashtra State Contractors’ Association, said PWD officials recently held a meeting with various road and infrastructure project contractors regarding TReDS and promised to pay around ₹5,000 crore towards pending dues soon.

“Contractors are thinking about it as they will have to accept a cut of over 4% in bills towards payment of interest,” Bhosale added.

The skill development department is also trying to raise ₹4,000 crore from the Asian Development Bank (ADB) for the Mahadrishti skill development project. This project aims to provide modern skill training as per industry requirements, particularly in rural and remote areas.

These efforts highlight the government's proactive approach to address the financial challenges and ensure the continuity of essential projects and schemes in the state.