External loans to Maharashtra departments after CM's approval: Govt order

Mumbai: All departments in Maharashtra will have to submit a preliminary project report to the chief minister for approval to avail external assistance loans from multilateral, bilateral and international funding agencies, as per a government order.

The external loans should not be treated as a source to fulfil financial needs, and it should be ensured they are within the fiscal deficit limits, said a government resolution (GR) issued by the state finance department on Tuesday.

Negotiations and loan agreement should be done with the approval of the state cabinet, the order said.

"While raising external assistance loans, care should be taken to ensure that fiscal deficit will remain within limits of the FRBM Act and also within limits of the Net Borrowing Ceiling approved by the Central Government," it said.

As per the Fiscal Responsibility and Budget Management (FRBM) Act, the government is required to limit the fiscal deficit to 3 per cent of the gross state domestic product (GSDP).

In the 2025-26 budget, the state managed to keep the fiscal deficit at 2.7 per cent, slightly lower than the 2.9 per cent in the previous fiscal.

The government order said the external loans should not be treated as a source to fulfil financial needs.

A preliminary project report prepared in assistance with the Maharashtra Institute for Transformation (MITRA) should be submitted to the chief minister and then after approval, the report should be uploaded on the website of central government's Department of Economic Affairs (DEA), it said.

Once approved by the DEA's screening committee, a detailed project report (DPR) will be presented to the central government and the funding agencies for various infrastructure and socially-relevant projects, the order said.

The DPR should adequately reflect the strategic elements of techno economic, ecological, socio-cultural, institutional dimensions in the project design, it said.

An objective-oriented project design along with a work plan, cost and time schedule should be part of the DPR, the order said.

Negotiations, loan agreement should be done with the state cabinet's approval and the action taken report should be submitted to the Union finance ministry after completion.

Care should be taken to ensure the project is completed in time, the order said.

In the more than Rs 7,00,020 crore Maharashtra budget for the fiscal 2025-26 presented by state Finance Minister Ajit Pawar last month, the government projected a revenue deficit of Rs 45,891 crore and a fiscal deficit of more than Rs 1,36,000 crore.

The revenue receipts are expected to be more than Rs 5,60,000 crore.

Deputy Chief Minister Pawar had said the government has been successful in keeping the fiscal deficit below 3 per cent of the GSDP, and the state's revenue deficit has been consistently less than 1 per cent of the gross state income.