Maharashtra Unveils Farm Loan Waiver Scheme as State Debt Soars to Rs 11 Lakh Crore
The Maharashtra government, grappling with severe financial constraints, has officially announced a comprehensive farm loan waiver in its latest state budget, fulfilling a key election promise. This decision comes as the state's debt projection for the 2026-27 fiscal year reaches an unprecedented high of Rs 11 lakh crore, marking a sharp increase of Rs 1.7 lakh crore within just one year.
Details of the Punyashlok Ahilyadevi Holkar Farmers Loan Waiver Scheme
Introduced by Chief Minister Devendra Fadnavis during the budget presentation in the state assembly, the Punyashlok Ahilyadevi Holkar Farmers Loan Waiver Scheme represents the third such agricultural debt relief initiative in Maharashtra over the past decade. The scheme is designed to provide substantial financial support to farmers burdened by overdue crop loans.
Key benefits include:
- A debt waiver of up to Rs 2 lakh for eligible farmers who have outstanding crop loans as of September 30, 2025.
- An incentive of Rs 50,000 for farmers who maintain regular loan repayments, encouraging financial discipline.
Fadnavis emphasized that the waiver aims to make indebted farmers eligible for fresh crop loans, rather than benefiting banks. He noted that preliminary data from a dedicated committee indicates approximately 28-30 lakh farmers could qualify, with final details to be announced after the committee submits its report by April 30.
Mounting Debt and Fiscal Challenges
The state's financial health has been under intense scrutiny, with debt levels more than tripling over the last decade. Officials attribute the recent Rs 1.7 lakh crore surge to the inclusion of debt from state agencies and long-term liabilities. However, Fadnavis defended the fiscal position, stating that around Rs 90,000 crore of the total debt would be settled by the central government through transfers.
"Debt cannot be considered in isolation but as a share of GSDP," Fadnavis asserted. "Maharashtra's fiscal deficit remains within 3% of GSDP, making it the only large state adhering to this limit." The projected revenue deficit stands at Rs 40,522 crore, highlighting the gap between income and expenditure.
Budget Highlights and Other Initiatives
Despite fiscal pressures, the budget maintains a focus on development and welfare. Capital expenditure for infrastructure projects has increased from Rs 93,165 crore in 2025-26 to Rs 1.2 lakh crore. Key announcements include:
- Environmental Measures: Doubling the environment tax on private vehicles causing air pollution, alongside a 16%-30% concession on motor vehicle tax for new vehicles purchased after scrapping old, non-compliant ones.
- Agricultural Support: Allocation of Rs 20,000 crore for a free power scheme for farmers with agricultural pumps up to 7.5 hp, expansion of natural farming on 5 lakh hectares, and inclusion of farm labourers in the Gopinath Munde accident scheme.
- Industrial and Service Sector Boost: Establishment of MSME centres in every district, creation of 400 new global competence centres, and allotment of 130 acres in Wadala for a world-class startup and innovation hub.
- Social Initiatives: Continuation of the Mukhya Mantri Majhi Ladki Bahin Yojana, though with a reduced outlay from Rs 35,000 crore to Rs 27,000 crore, and declaration of 2026-27 as a year of social harmony with funds for commemorating reformers like Mahatma Phule and Babasaheb Ambedkar.
Political Context and Dedications
The budget was dedicated to the late Deputy Chief Minister Ajit Pawar, who served as finance minister until his death in an air crash on February 28. Fadnavis announced a memorial in Pawar's honour and the "Dynamic Civil Services" award in his name. During the assembly session, NCP MLAs raised slogans of "Ajitdada amar rahe" as Fadnavis began his speech.
Fadnavis outlined the government's vision for "Viksit Maharashtra," aiming to grow the state's economy to $5 trillion through pillars of progressive policies, sustainability, inclusion, and good governance. He stressed that future budgets would reflect this resolve, focusing on revenue enhancement and balanced regional development to spur economic growth.
