MP’s debt increased 16 times in last 20 years:Total borrowings jump from ₹20,000 cr to ₹4.64 lakh cr; govt paying ₹27,000 cr annually as interest

During the Digvijaya Singh government, Madhya Pradesh’s total debt stood at ₹20,000 crore. Today, the state government is paying ₹27,000 crore annually just as interest on its debt. Over the last two decades, Madhya Pradesh has seen visible development, but the debt burden has also multiplied sharply. Only last week, the government borrowed another ₹5,200 crore. With this latest borrowing, the state’s total debt has reached ₹4,64,340 crore. In comparison, the government’s budget for the current financial year (2025–26) is ₹4,21,000 crore — which means the debt now exceeds the budget by about ₹43,000 crore. The government maintains that these borrowings are being made to finance development projects. However, the reality is that more than ₹1 lakh crore from the state exchequer is being spent on subsidies and free-seed schemes. The finance department estimates that by the end of this fiscal year, government expenditure will be 64% higher than its total income. Simply put, the Madhya Pradesh government has ‘stretched its legs far beyond its blanket.’ What impact this growing debt will have on the state’s financial health in the coming years — and whether the government will be able to manage repayments smoothly — remains a major concern. Dainik Bhaskar spoke to experts to understand the situation. Read the full report.. Understand the Government’s Earnings in 3 Points 1. New GST rates may lead to ₹8,500 crore loss Goods and Services Tax (GST) is one of the major sources of revenue for the state. After the implementation of GST in 2016, states receive their share of central tax collections. In the current financial year, the government expected to collect ₹32,705 crore from central GST and ₹42,140 crore from state GST. However, by September, only ₹16,956 crore had been received from central GST — ₹2,644 crore or 13.5% less than last year. With new GST rates now in effect, revenue projections have become uncertain. Estimates suggest that the revised rates could result in a revenue loss of around ₹8,500 crore for the state this year. For 2025–26, the state expects total receipts of ₹2,90,879 crore from all income sources. 2. MP has 5th highest VAT on petrol diesel in India Commercial tax is the second-largest source of state income, primarily driven by Value Added Tax (VAT) on fuel. The government expects ₹22,861 crore this year from this head, but by September, only ₹8,909 crore had been collected — ₹941 crore less than during the same period last year. Madhya Pradesh ranks as the fifth-highest state in the country in terms of VAT on petrol and diesel. The state levies 29% VAT on petrol and 19% on diesel, along with an additional cess of ₹2.50 per litre on petrol and ₹1.50 per litre on diesel. 3. Only 40% revenue collected from own sources in 6 months The state government projected revenue of ₹1.30 lakh crore from its own tax sources in 2025–26. This includes collections from state GST, minerals, excise, stamp and registration fees, sales tax, entry tax, and entertainment tax. So far, only ₹54,000 crore has come into the treasury — about 40% of the total estimate. In the last fiscal year, the state had collected ₹1.18 lakh crore under this head. Excise revenue is expected to reach ₹18,000 crore this year, but by September, only ₹8,293 crore — or 46% — had been collected. Similarly, of the ₹13,069 crore target from minerals, only ₹4,853 crore had been realized. Revenue from stamp and registration fees is ₹270 crore below target, while transport revenue stands at just ₹618 crore. Where is the government spending? 1. 37% rise in free seed and subsidy spending in 3 years The Mohan government spent ₹1.06 lakh crore on free seed schemes and subsidies in 2023–24. This rose to ₹1.32 lakh crore in 2024–25, and for 2025–26, the estimated expenditure is ₹1.46 lakh crore. Major schemes under this include Ladli Bahna Yojana, Kisan Samman Nidhi, and other welfare initiatives. In 2023–24, ₹43,237 crore was spent on subsidies alone. For the current year, this figure is expected to touch ₹47,000 crore. The government has also announced the implementation of the Bhavantar scheme for soybean farmers, likely to cost ₹300–400 crore. So far, about 9 lakh farmers have registered for it. Under the Kisan Samman Nidhi scheme, ₹5,220 crore has been distributed to about 87 lakh farmers in the state. When the scheme began, each farmer received ₹4,000 in two installments annually. Ahead of the 2023 assembly elections, the amount was raised to ₹6,000 per year, adding an additional annual burden of ₹1,750 crore to the state exchequer. The Ladli Bahna Yojana was launched before the 2023 assembly elections, providing ₹1,250 per month to every eligible woman. When it began in March 2023, the number of beneficiaries was 1.31 crore, it has since reduced to around 1.26 crore. According to official data, from June 2023 to June 2025, about ₹4.02 lakh crore has been paid in 27 installments. The government spends an average of ₹19,000–₹20,000 crore annually on the scheme. From November 2025, the monthly amount has been increased to ₹1,500, which will raise the annual expenditure to ₹22,680 crore in 2026–27. Around ₹300 crore spent on scooter-laptop scheme Under the scooter scheme, one male and one female topper from each school in the 12th grade receive a scooter. The government provides ₹90,000 for a petrol scooter and ₹1.20 lakh for an electric scooter. This year, ₹75 crore was spent — 5,018 female students received petrol scooters, and 2,760 received electric scooters. Additionally, about 94,000 students scoring over 75% marks in the 12th board exams received ₹25,000 each to purchase laptops. This cost the state ₹238 crore. 2. 27% of budget spent on salaries, allowances, and establishment Madhya Pradesh’s total budget for 2025–26 is ₹4.21 lakh crore, of which ₹1.15 lakh crore is classified as establishment expenditure. Out of this, 83% — or ₹95,815 crore — will go toward salaries, allowances, and pensions. In 2024–25, the government had spent ₹84,687 crore under this head, indicating a 13% year-on-year increase. 3. ₹57,000 crore spent on debt and interest payments After subsidies and salaries, the largest share of expenditure goes toward debt servicing. As of October 2025, the state’s outstanding debt is ₹4.64 lakh crore. The finance department has projected interest payments of ₹29,000 crore for the current fiscal. Last year, interest payments totaled ₹27,000 crore. The overall expenditure on debt repayment and interest is expected to reach ₹57,382 crore this year — slightly up from ₹56,253 crore in 2024–25. What experts say? Financial expert Rajesh Jain says the government’s rising dependence on borrowing for meeting expenditure is a warning sign. He said, Due to lower revenue collections, the government has been forced to borrow regularly. Currently, the state’s debt is still within 3.5% of its GDP limit, but the pattern of spending is concerning. Jain explains that while borrowing for development works is justifiable, much of the debt is being used to fund welfare schemes, subsidies, and election-linked promises rather than productive assets. ‘This weakens fiscal discipline and does not generate returns,’ he said. On the question of debt exceeding the annual budget, Jain noted that it might not immediately harm the state because the budget itself has been expanding. ‘However, since most of the borrowed funds are going toward non-productive heads, the state is not earning anything back. That is where the real concern lies,’ he added.