Higher welfare spends announced by the Eknath Shinde-led Maharashtra government ahead of the elections will take the fiscal deficit beyond the target, and may lead to a compression in capital expenditure, a report said on Monday.

The fiscal deficit for FY25 is expected to come at 3 per cent as against the budget target of 2.5 per cent, India Ratings and Research said in a report, adding that the state will resort to higher borrowings to bridge the gap.

The government presented the final budget for FY25 of Rs 6.12 lakh crore on June 28, and also tabled supplementary demands of Rs 94,889 crore on July 10 primarily toward social welfare schemes, it said.

The supplementary demands include Rs 25,000 crore for Mukhyamantri Majhi Ladki Bahin Yojana, Rs 6,056 crore for skill development, Rs 4,317 crore towards social justice, Rs 4,185 crore on public health, it said.

The revenue deficit will come at 1.3 per cent as against the budget target of 0.5 per cent, it said.

"The fiscal deficit is expected to be around 3 per cent in FY25 with a nominal GSDP growth assumption of 9.5 per cent," it said.

"There could also be a compression in capex in FY25 compared with FY25BE (budget estimates) to accommodate revenue expenditure while containing the fiscal deficit," the rating agency said.

The state would be availing fresh market borrowings worth Rs 75,917 crore, which would finance 68.8 per cent of its budgeted fiscal deficit in FY25, the agency said.

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