The Finance Minister of Haryana, Captain Abhimanyu, presented the Budget for financial year 2018-19 on March 9, 2018. 

Budget Highlights

  • The Gross State Domestic Product of Haryana for 2018-19 (at current prices) is estimated to be Rs 6,87,572 This is 13% higher than the revised estimates for 2017-18.
  • Total expenditure for 2018-19 is estimated to be Rs 1,02,733 crore, a 9.7% increase over the revised estimates of 2017-18. In 2017-18, there was an increase of Rs 1,301 crore (1.4%) in the expenditure over the budget estimates.
  • Total receipts (excluding borrowings) for 2018-19 are estimated to be Rs 83,333 crore, an increase of 9% as compared to the revised estimates of 2017-18. In 2017-18, total receipts (excluding borrowings) were 2.2% (1,633 crore) higher than the budget estimates.
  • Revenue deficit for the next financial year is targeted at Rs 8,254 crore, or 1.2% of the Gross State Domestic Product (GSDP). Fiscal deficit is targeted at Rs 19,399 crore (2.82% of GSDP). 
  • The allocations for agriculture, health, rural development, and irrigation are estimated to witness the highest increase in allocations over the previous year. Allocations for energy, and urban development are expected to witness to decrease.

Policy Highlights

  • Haryana has launched a limited Cashless Medical Services Scheme for government employees and pensioners. The scheme is applicable for six life threatening conditions: (i) cardiac emergencies, (ii) accidents, (iii) 3rd and 4th stage cancer, (iv) coma, (v) brain haemorrhage, and (vi) electrocution.  The upper limit of up to five lakh rupees for cashless medical facility has been removed.
  • An Asset Management Cell has been created for identifying government land and properties, both, within and outside the state.  The state is expected to raise Rs 1,000 crore by monetising these properties.
  • Haryana has approved the creation of a new non-banking financial company (NBFC) called ‘Haryana State Financial Services Ltd.’. The company will act as an in-house treasury manager to efficiently manage surplus funds of public sector enterprises, autonomous bodies, and other state entities.
  • The state has set up the Swarna Jayanti Haryana Institute of Fiscal Management. The Institute will provide training and conduct research programmes for government officials in the areas of public finance policy, financial management, and administration.  Further, the state is setting up a Sustainable Development Goals (SDGs) Coordination Centre to implement ‘Vision 2030’ based on these SDGs.

Haryana’s Economy

  • Economy: The GSDP of Haryana has grown in the range of 7% to 9% between 2012-13 and 2016-17.  The growth rate dropped to 5.7% in 2014-15.
     
  • The services sector with a share of 52% in the GSDP grew by 11% in 2016-17 over the previous year.  Manufacturing, which contributes 30% to the GSDP grew by 6.1%.  Agriculture with a share of 18% grew by 7% in 2016-17.
     
  • Per capita income:  The per capita GSDP of Haryana in 2016-17 (at current prices) was Rs 1,99,612.  This is 11% higher than 2015-16, when the per capita GSDP was Rs 1,79,432.

Figure 1: Growth in GSDP and sectors (year-on-year)

Source: Central Statistics Office; PRS.

Budget Estimates for 2018-19

  • The total expenditure in 2018-19 is targeted at Rs 1,02,733 crore. This is 9.7% higher than the revised estimates of 2017-18.  This expenditure is proposed to be met through receipts (other than borrowings) of Rs 83,333 crore and borrowings of Rs 19,399 crore.  Total receipts for 2018-19 (other than borrowings) are expected to be 9% higher than the revised estimates of 2017-18. 

Table 1: Budget 2018-19 - Key figures (Rs crore)

Items

2016-17 Actuals

2017-18 Budgeted

2017-18 Revised

% change from BE 2017-18 to RE of 2017-18

2018-19 Budgeted

% change from RE 2017-18 to BE 2018-19

Total Expenditure

79,781

92,384

93,686

1.4%

1,02,733

9.7%

A. Borrowings

26,285

17,572

17,240

-1.9%

19,399

12.5%

B. Receipts (except borrowings)

53,496

74,813

76,445

2.2%

83,333

9.0%

Total Receipts (A+B)

79,781

92,384

93,686

1.4%

1,02,733

9.7%

Revenue Deficit

15,907

11,125

8,226

-26.1%

8,254

0.3%

As % of GSDP

2.92%

1.80%

1.35%

 

1.20%

 

Fiscal Deficit

26,285

17,572

17,240

-1.9%

19,399

12.5%

As % of GSDP

4.82%

2.84%

2.83%

 

2.82%

 

Primary Deficit

15,743

6,315

5,353

-15.2%

5,362

0.2%

As % of GSDP

2.89%

1.02%

0.88%

 

0.78%

 

Notes: BE is Budget Estimate; RE is Revised Estimate.  

Sources: Haryana Budget Documents 2018-19; PRS.

Expenditure in 2018-19

  • Capital expenditure for 2018-19 is proposed to be Rs 17,546 crore, which is an increase of 14% over the revised estimates of 2017-18. This includes expenditure which affects the assets and liabilities of the state, and leads to creation of assets (such as bridges and hospital), and repayment of loans, among others. 

Haryana is expected to spend Rs 20,597 crore on salaries, and Rs 8,301 crore on pensions.  The total amount of Rs 28,898 crore constitutes 34% of the state’s revenue expenditure.  The estimated expenditure is 8% higher than 2017-18.

  • Revenue expenditure for 2018-19 is proposed to be Rs 85,187 crore, which is an increase of 9% over revised estimates of 2017-18. This expenditure includes payment of salaries, maintenance, etc. 
  • In 2018-19, Haryana is expected to spend Rs 26,503 crore on servicing its debt (i.e., Rs 12,466 crore on repaying loans, and Rs 14,037 crore on interest payments). This is 40% higher than the revised estimates of 2017-18. 

Table 2: Expenditure budget 2018-19 (Rs crore)

Item

2016-17 Actuals

2017-18 Budgeted

2017-18 Revised

% change from BE 2017-18 to RE 2017-18

2018-19 Budgeted

% change from RE 2017-18 to BE 2018-19

Capital Expenditure

11,378

12,449

15,374

23.5%

17,546

14.1%

Revenue Expenditure

68,403

79,936

78,311

-2.0%

85,187

8.8%

Total Expenditure

79,781

92,384

93,686

1.4%

1,02,733

9.7%

A. Debt Repayment

5,276

9,945

7,054

-29.1%

12,466

76.7%

B. Interest Payments

10,542

11,257

11,887

5.6%

14,037

18.1%

Debt Servicing (A+B)

15,818

21,202

18,941

-10.7%

26,503

39.9%

 Sources: Haryana Budget Documents 2018-19; PRS.

Sector expenditure in 2018-19

The sectors listed below account for 58% of the total budgeted expenditure of Haryana in 2018-19.  A comparison of Haryana’s expenditure on key sectors with 18 other states can be found in the Annexure.

Table 3: Sector-wise expenditure for Haryana Budget 2018-19 (Rs crore)

Item

2016-17 Actuals

2017-18 Revised

2018-19 Budgeted

% change from RE 2017-18 to BE 2018-19

Budget Provisions for 2018-19

Education

11,202

13,407

14,935

11%

  • Out of the total expenditure, 96% is on revenue expenses, and the remaining 4% on capital expenses.
     
  • Classes at the National Law University, Sonepat are proposed to be started from 2018-19. 

Energy

12,410

13,259

12,076

-9%

  • The power transmission system will be strengthened by creating 24 new sub-stations, and adding 775 km of transmission lines. 

Water Supply, Sanitation, Housing, and Urban Development

5,526

10,282

9,553

-7%

  • Haryana has been declared an open defecation free state. 
     
  • 20 cities have been covered under the AMRUT scheme for urban development.
     
  • The state has granted approval for the construction of 11,259 houses for the economically weaker sections.

Transport

4,408

4,945

5,446

10%

  • Strategic action plan for phased development of International Aviation Hub at Hisar has been finalised.
     
  • Haryana is the first state which has adopted a new technology of mechanised filling of potholes. 

Health

3,044

3,815

4,769

25%

  • The government seeks to open medical colleges in every district.  Government medical colleges in Bhiwani and Jind are in the pipeline.  It also proposes to open medical colleges in Mahendragarh, and Gurugram.  The National Cancer Institute at AIIMS Jajjhar will commence operations during the year.

Agriculture

2,932

3,240

4,760

47%

  • The government has decided to set up ‘Haryana Kisan Kalyan Pradhikaran’.  The authority will take measures to make agriculture remunerative and enhance productivity. 
     
  • The state has prepared a ‘Horticulture Vision’ which seeks to double the area under horticulture by 2030.

Rural Development

2,892

3,476

4,232

22%

  • Under the Swachh Bharat Mission (Gramin), 6.3 lakh individual household latrines have been constructed.  It is envisaged to make Haryana plastic free.

Irrigation

2,338

2,778

3,322

20%

  • Four projects are in the pipeline to bring 4,000 cusecs of additional water to the Yamuna river during monsoons.  These projects are: (i) Western Jamuna Canal (WJC) Main Line Lower, (ii) WJC Main Branch, (iii) rehabilitation of parallel Delhi branch, and (iv) remodelling of Augmentation Canal to construct new cement-concrete lined channel.

% of total expenditure

56%

59%

58%

 

 

Source: Budget Speech 2018-19 and Annual Financial Statement, Haryana Budget Documents 2018-19; PRS.

  • During 2017-18, Haryana is expected to spend more than its budget estimates on sectors such as water supply, housing, and urban development (21%), and energy (13%). It is expected to spend less than the budget estimate on agriculture (33%), education (11%), and rural development (8%).   
  • Haryana has allocated Rs 741 crore for the Sarva Shiksha Abhiyan in 2018-19. This is 17% more than the revised estimates of 2017-18 (Rs 632 crore).  It has allocated Rs 350 crore for MGNREGA, which is 3% more than the revised estimates of 2017-18 (340 crore).  Rs 160 crore has been allocated for the Pradhan Mantri Awas Yojana (Urban).  This is 33% more than the revised estimates of 2017-18 (Rs 120 crore).

Receipts in 2018-19

  • The total revenue receipts for 2018-19 are estimated to be Rs 76,933 crore, an increase of 9.8% over the revised estimates of 2017-18. Of this, Rs 60,434 crore will be raised by the state through its own resources (79% of the revenue receipts), and Rs 16,499 crore will be devolved by the centre in the form of grants and the state’s share in taxes (21% of the revenue receipts). 
  • Non Tax Revenue: Haryana has estimated to generate Rs 11,303 crore through its own non-tax sources in 2018-19. This is an increase of 2.9% over the revised estimates of 2017-18. 

Table 4: Break up of state government receipts (Rs crore)

Item

2016-17 Actuals

2017-18 Budgeted

2017-18 Revised

% change from BE 2017-18 to RE 2017-18

2018-19 Budgeted

% change from RE 2017-18 to BE 2018-19

State's Own Tax

34,026

43,340

44,690

3.1%

49,132

9.9%

State's Own Non-Tax

6,196

10,082

10,985

9.0%

11,303

2.9%

Share in Central Taxes

6,597

8,372

8,372

0.0%

9,300

11.1%

Grants-in-aid from Centre

5,678

7,018

6,039

-13.9%

7,199

19.2%

Total Revenue Receipts

52,497

68,811

70,085

1.9%

76,933

9.8%

Borrowings

26,285

17,572

17,240

-1.9%

19,399

12.5%

Other receipts

1,000

6,002

6,360

6.0%

6,400

0.6%

Total Capital Receipts

27,285

23,574

23,600

0.1%

25,800

9.3%

Total Receipts

79,781

92,384

93,686

1.4%

1,02,733

9.7%

Sources: Haryana Budget Documents 2018-19; PRS.

  • Tax Revenue: Total own tax revenue of Haryana is estimated to be Rs 49,132 crore in 2018-19, which is an increase of 10% over the revised estimates of 2017-18.  The composition of the state’s tax revenue is shown in Figure 2.  The tax to GSDP ratio is targeted at 7.1% in 2018-19, which is marginally lower than the revised estimate of 7.3% in 2017-18.  This implies that growth in collection of taxes is expected to be lower than the growth in the economy (13%).

Figure 2: Composition of Tax Revenue in 2018-19 (BE)

  • State Goods and Services Tax (GST) is expected to be the largest component of Haryana’s own tax revenue in 2018-19.  It is expected to generate Rs 23,760 crore (48% of the own tax revenue). 
     
  • The state is expected to generate Rs 11,440 crore from the levy of sales tax on items such as alcohol for human consumption and petroleum products.  Further, the state is expected to raise Rs 6,000 crore from state excise duty. 
     
  • Tax revenue will also be generated by levying stamp duty on real estate transactions (Rs 4,500 crore), and taxes on vehicles (Rs 2,950 crore).

Deficits, Debts and FRBM Targets for 2018-19

The Haryana Fiscal Responsibility and Budget Management (FRBM) Act, 2005 provides annual targets to progressively reduce the outstanding liabilities, revenue deficit and fiscal deficit of the state government. 

Haryana had targeted a fiscal deficit of 2.47% at the budget stage for 2016-17.  It exceeded this target with the actual fiscal deficit being 4.82% for the year. 

Revenue deficit:  It is the excess of revenue expenditure over revenue receipts.  A revenue deficit implies that the government needs to borrow in order to finance its expenses which do not create capital assets.  The budget estimates a revenue deficit of Rs 8,254 crore (or 1.2% of GSDP) in 2018-19.  The estimate indicates that the state is not expected to meet the target of eliminating revenue deficit, prescribed by the 14th Finance Commission.

Fiscal deficit:  It is the excess of total expenditure over total receipts.  This gap is filled by borrowings by the government, and leads to an increase in total liabilities.  In 2018-19, fiscal deficit is estimated to be Rs 19,399 crore, which is 2.82% of the GSDP.  The estimate is within the 3% limit prescribed by the 14th Finance Commission.  This limit may be relaxed to a maximum of 3.5%, if states are able to contain their debt and interest payments to certain specified levels.

Outstanding Liabilities:  It is the accumulation of borrowings over the years.  In 2018-19, the outstanding liabilities are expected at 23.4% of the GSDP.

Table 5: Budget targets for deficits for Haryana (% of GSDP)

Year

Revenue
Deficit
(-)/Surplus (+)

Fiscal
Deficit
(-)/Surplus (+)  

Outstanding Liabilities

2016-17

-2.92%

-4.82%

22.85%

2017-18 (RE)

-1.35%

-2.83%

23.30%

2018-19 (BE)

-1.20%

-2.82%

23.44%

2019-20

Revenue Surplus

-3.00%

25.00%

2020-21

Revenue Surplus

-3.00%

25.00%

Sources: Haryana Budget Documents 2018-19; PRS.

Figures 3 and 4 show the trend in deficits and outstanding liabilities targets from 2016-17 to 2018-19:

Figure 3: Revenue and Fiscal Deficit (% of GSDP)

Sources: Haryana Budget Documents; PRS. 

Figure 4:Outstanding liabilities targets (% of GSDP)

Sources: Haryana Budget Documents; PRS. 

Annexure

The graphs below compare Haryana’s expenditure on four key sectors as a proportion of its total budget, with 19 states (including Haryana) based on their budgets presented for 2017-18.[1] 

  • Education: Haryana has allocated 14.8% of its total budget on education in 2018-19.  This is lower than the average expenditure allocated to education by 18 other states (using 2017-18 BE). 
  • Health: Haryana has allocated 4.7% of its total expenditure on health, which is marginally lower than the average expenditure of 18 other states.  Since 2016-17, the share of total expenditure spent by Haryana on health has gradually increased from 4%.
  • Agriculture: The state has allocated 4.7% of its total budget towards agriculture and allied activities.  This is lower than the allocations of 18 other states (6.4%).  In 2017-18, the state had allocated 5.3% of its expenditure for agriculture at the budget stage.  This was revised down to 3.5% at the revised stage.
  • Rural development: Haryana has allocated 4.2% of its expenditure on rural development.  This is lower than the average (5.6%) of the 18 other states.

Note:  2016-17, 2017-18 (BE), 2017-18 (RE), and 2018-19 (BE) figures are for Haryana.

Source: Annual Financial Statement (2017-18 and 2018-19), various state budget documents; PRS.

 

[1] The 18 states apart from Haryana are: Andhra Pradesh, Assam, Bihar, Chhattisgarh, Delhi, Gujarat, Jammu and Kashmir, Karnataka, Kerala, Madhya Pradesh, Maharashtra, Odisha, Punjab, Rajasthan, Tamil Nadu, Telangana, Uttar Pradesh, and West Bengal.

 

DISCLAIMER: This document is being furnished to you for your information.  You may choose to reproduce or redistribute this report for non-commercial purposes in part or in full to any other person with due acknowledgement of PRS Legislative Research (“PRS”).  The opinions expressed herein are entirely those of the author(s).  PRS makes every effort to use reliable and comprehensive information, but PRS does not represent that the contents of the report are accurate or complete.  PRS is an independent, not-for-profit group.  This document has been prepared without regard to the objectives or opinions of those who may receive it.