The western state has budgeted for a sizeable revenue deficit along with others such as Andhra Pradesh, Rajasthan, Kerala and Tamil Nadu in its budget announced before the lockdown, but has its fiscal deficit within the 3 per cent of GSDP, which will allow for the additional borrowings, domestic rating agency Care Ratings said.
Maharashtra has over 12,974 confirmed cases in the national tally of 43,000 cases as of Monday and also the highest number of those dead. Its key economic centres, including capital Mumbai, Pune and Nagpur are classified as "red zones" having many containment zones, which limit economic activity.
Among the states that have budgeted for a revenue deficit, Maharashtra has the highest headroom for additional borrowing, the report by the agency said.
"Maharashtra can increase borrowing by Rs 42,235 crore, Tamil Nadu by Rs 3,347 crore, Haryana by Rs 2,537 crore, Punjab by Rs 516 crore and Rajasthan by Rs 113 crore," it said.
The agency, however, warned that because of loss of revenues due to the ongoing lockdowns, states are under "considerable financial stress" and have been forced to delay expenditures including salaries, like in the case of Maharashtra.
The state has, however, not resorted to increasing taxes on fuels to shore up its revenues like Assam, Meghalaya, Nagaland and Haryana have done in the recent days, it said.
As a result of the stress, many states have resorted to additional borrowing already often at costs higher than the average ones, the report said, pointing out that borrowings in April stood at Rs 59,255 crore, which is double the size of money raised in April 2019.
Maharashtra, with Rs 7,000 crore of borrowings accepted in April at a weighted average yield of 7.76 per cent, is second behind Rs 8,000 crore done by Tamil Nadu, the report said.
It acknowledged that the COVID-19 relief measures entail higher expenditure to be incurred by the state governments even as they are faced with a significant loss of income/revenues from the halting of economic activity.
Arunachal Pradesh, Assam, Bihar, Gujarat, Jharkhand, Karnataka, Mizoram, Uttar Pradesh, Uttrakhand and union territory of Jammu & Kashmir, which have budgeted for a revenue surplus and a fiscal deficit lesser than the 3 per cent of GSDP cap under the fiscal responsibility and budget management rules, are in the best position because they have the fiscal space to borrow more, it said. AA MKJMKJ