The Finance Minister, Mr. Tarun Bhanot, presented the budget for Madhya Pradesh for financial year 2019-20 on July 10, 2019. The Minister had previously presented the interim budget for the state in February 2019.
Budget Highlights
- The Gross State Domestic Product (GSDP) of Madhya Pradesh for 2019-20 (at current prices) is estimated to be Rs 9,62,430 crore. This is 14.2% higher than the revised estimate for 2018-19.
- Total expenditure for 2019-20 is estimated to be Rs 2,28,888 crore, a 20% increase over the revised estimate of 2018-19. In 2018-19, as per the revised figures, there is estimated decrease of Rs 8,447 crore (4.2%) of expenditure over the budgeted estimate.
- Total receipts (excluding borrowings) for 2019-20 are estimated to be Rs 1,81,979 crore, an increase of 20% as compared to the revised estimate of 2018-19. Borrowings are estimated to be Rs 42,984 crore, an increase of 15.3% over the revised estimate of 2018-19.
- Revenue surplus for 2019-20 is targeted at Rs 733 crore, or 0.08% of the Gross State Domestic Product (GSDP). Fiscal deficit is targeted at Rs 32,106 crore (3.34% of GSDP).
- Sectors such as Rural Development (36%), Health and Family Welfare (35%), and Energy (34%) saw the highest increase in allocations.
Policy Highlights
- River rejuvenation programme has been announced for holistic water management through rain water harvesting and groundwater recharge. In the first phase of the programme, 40 rivers have been selected from 36 districts.
- Rs 1,000 crore has been allocated to protect water sources and quality through the proposed Right to Water Act.
- Mukhyamantri Bagwani Evam Khadya Sanskaran Yojana: Rs 100 crore has been allocated to promote horticulture and food processing industries.
- Under Indira Griha Jyoti Yojana, domestic electricity consumers will pay a monthly bill of Rs 100 for up to 100 units of consumption. Rs 2,400 crore has been allocated for the same.
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Madhya Pradesh’s Economy
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Figure 1: Growth in GSDP and sectors in Madhya Pradesh (year-on-year)
Note: As per CSO, agriculture here includes mining and quarrying. All numbers are as per current prices. Sources: Ministry of Statistics and Programme Implementation, PRS. |
Budget Estimates for 2019-20
- The total expenditure in 2019-20 is targeted at Rs 2,28,888 crore. This is 20% higher than the revised estimate of 2018-19. This expenditure is proposed to be met through receipts (other than borrowings) of Rs 1,81,979 crore and borrowings of Rs 42,984 crore. In 2019-20, receipts (other than borrowings) are expected to be 20% higher than the revised estimate of 2018-19.
Table 1: Budget 2019-20 - Key figures (in Rs crore)
|
Items |
2017-18 Actuals |
2018-19 Budgeted |
2018-19 Revised |
% change from BE 2018-19 to RE of 2018-19 |
2019-20 Budgeted |
% change from RE 2018-19 to BE 2019-20 |
|
Total Expenditure |
1,68,486 |
1,99,183 |
1,90,736 |
-4.2% |
2,28,888 |
20.0% |
|
A. Receipts (except borrowings) |
1,39,964 |
1,59,905 |
1,51,667 |
-5.2% |
1,81,979 |
20.0% |
|
B. Borrowings |
21,892 |
37,840 |
37,274 |
-1.5% |
42,984 |
15.3% |
|
Total Receipts (A+B) |
1,61,856 |
1,97,745 |
1,88,941 |
-4.5% |
2,24,963 |
19.1% |
|
Revenue Deficit (-)/ Surplus (+) |
4,629 |
263 |
137 |
-47.7% |
733 |
433.6% |
|
As % of GSDP |
0.65% |
0.03% |
0.02% |
|
0.08% |
|
|
Fiscal Deficit (-)/ Surplus (+) |
-22,430 |
-26,780 |
-28,612 |
6.8% |
-32,106 |
12.2% |
|
As % of GSDP |
-3.17% |
-3.24% |
-3.40% |
|
-3.34% |
|
|
Primary Deficit (-)/ Surplus (+) |
-11,385 |
-13,913 |
-16,370 |
17.7% |
-17,674 |
8.0% |
|
As % of GSDP |
-1.61% |
-1.68% |
-1.94% |
|
-1.84% |
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Notes: BE is Budget Estimate; RE is Revised Estimate.
Sources: Madhya Pradesh Budget Documents 2019-20, July 2019; PRS.
Expenditure in 2019-20
- Capital expenditure for 2019-20 is proposed to be Rs 50,267 crore, which is an increase of 26.6% over the revised estimate of 2018-19. Capital expenditure includes expenditure affecting the assets and liabilities of the state, such as: (i) capital outlay, i.e. expenditure which leads to creation of assets (such as bridges and hospitals), and (ii) repayment and grant of loans by the state government.
- Madhya Pradesh’s capital outlay for 2019-20 is estimated to be Rs 33,490 crore, which is 22.9% higher than the revised estimate of 2018-19. The revised figure for 2018-19 is estimated to be 7.2% lower than the budgeted estimate made for that year. In 2019-20, capital outlay on education is estimated to increase by Rs 746 crore (74%).
- Revenue expenditure for 2019-20 is proposed to be Rs 1,78,621 crore, which is an increase of 18.3% over the revised estimate of 2018-19. This expenditure includes payment of salaries, pensions, and interest, among others. Revenue expenditure accounts for 78% of the total expenditure proposed for 2019-20.
Table 2: Expenditure budget 2019-20 (in Rs crore)
|
Item |
2017-18 Actuals |
2018-19 Budgeted |
2018-19 Revised |
% change from BE 2018-19 to RE 2018-19 |
2019-20 Budgeted |
% change from RE 2018-19 to BE 2019-20 |
|
Capital Expenditure |
38,240 |
43,559 |
39,713 |
-8.8% |
50,267 |
26.6% |
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of which Capital Outlay |
30,913 |
29,343 |
27,244 |
-7.2% |
33,490 |
22.9% |
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Revenue Expenditure |
1,30,246 |
1,55,624 |
1,51,022 |
-3.0% |
1,78,621 |
18.3% |
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Total Expenditure |
1,68,486 |
1,99,183 |
1,90,736 |
-4.2% |
2,28,888 |
20.0% |
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A. Debt Repayment |
5,776 |
12,498 |
10,456 |
-16.3% |
14,803 |
41.6% |
|
B. Interest Payments |
11,045 |
12,867 |
12,242 |
-4.9% |
14,432 |
17.9% |
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Debt Servicing (A+B) |
16,822 |
25,365 |
22,699 |
-10.5% |
29,235 |
28.8% |
Note: Capital outlay denotes expenditure which leads to creation of assets.
Sources: Madhya Pradesh AFS 2019-20 (July 2019); PRS.
Sector expenditure in 2019-20
The sectors listed below account for 67% of the total budgeted expenditure of Madhya Pradesh in 2019-20. A comparison of Madhya Pradesh’s expenditure on key sectors with that by other states can be found in the Annexure.
Table 3: Sector-wise expenditure for Madhya Pradesh Budget 2019-20 (Rs crore)
|
Sector |
2017-18 Actuals |
2018-19 Budgeted |
2018-19 Revised |
2019-20 Budgeted |
% change from RE 2018-19 to BE 2019-20 |
Budget provisions for 2019-20 |
|
Education |
24,342 |
28,817 |
28,591 |
32,046 |
12% |
|
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Agriculture and allied activities |
12,324 |
16,912 |
22,222 |
24,174 |
9% |
|
|
Water Supply, Sanitation, Housing and Urban Development |
19,682 |
18,048 |
16,329 |
20,821 |
28% |
|
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Energy |
17,233 |
16,212 |
11,461 |
15,302 |
34% |
|
|
Rural Development |
9,007 |
11,851 |
11,040 |
14,972 |
36% |
|
|
Health and Family Welfare |
7,449 |
8,385 |
7,785 |
10,499 |
35% |
|
|
Irrigation and Flood Control |
8,618 |
9,573 |
9,584 |
9,712 |
1% |
|
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Social Welfare and Nutrition |
6,776 |
8,362 |
7,738 |
9,690 |
25% |
|
|
Transport |
7,503 |
7,465 |
6,904 |
8,465 |
23% |
|
|
Police |
5,559 |
6,483 |
6,705 |
7,177 |
7% |
|
|
% of total expenditure |
70% |
66% |
67% |
67% |
|
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Source: Madhya Pradesh Budget Speech 2019-20, July 2019; Madhya Pradesh Annual Financial Statement 2019-20, July 2019; Madhya Pradesh Budget Press Release 2019-20, July 2019: PRS.
Committed liabilities: Committed liabilities of a state typically includes expenditure on payment of salaries, pensions, and interest payments. A larger proportion of state budget allocated for committed expenditure crowds out other developmental expenditure. In 2019-20, Madhya Pradesh has budgeted to spend Rs 63,265 crore on the payment of salaries, interest, and pensions. This is an increase of 14.3% over the revised estimates of 2018-19. Note that committed liabilities account for 28% of the total expenditure estimated for 2019-20.
Table 4: Expenditure on committed liabilities in 2019-20 (in Rs crore)
|
Item |
2017-18 Actuals |
2018-19 Budgeted |
2018-19 Revised |
% change from BE 2018-19 to RE 2018-19 |
2019-20 Budgeted |
% change from RE 2018-19 to BE 2019-20 |
|
Salaries |
25,664 |
31,920 |
30,420 |
-4.7% |
35,216 |
15.8% |
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Pensions |
9,290 |
12,557 |
12,669 |
0.9% |
13,617 |
7.5% |
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Interest payments |
11,045 |
12,867 |
12,242 |
-4.9% |
14,432 |
17.9% |
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Total Committed Liabilities |
46,000 |
57,344 |
55,331 |
-3.5% |
63,265 |
14.3% |
Note: BE is Budget Estimate; RE is Revised Estimate.; Sources: Madhya Pradesh FRBM Documents 2018-19 and 2019-20; PRS.
Receipts in 2019-20
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In 2019-20, Madhya Pradesh is expected to borrow Rs 42,984 crore to meet its expenditure requirements, which is 15.3% higher than the revised estimates of 2018-19. In 2018-19, the borrowings of the state were 1.5% lower than the amount budgeted. |
- The total revenue receipts for 2019-20 are estimated to be Rs 1,79,354 crore, an increase of 18.7% over the revised estimate of 2018-19. Of this, Rs 79,242 crore (44% of the revenue receipts) will be raised by the state through its own resources, and Rs 1,00,112 crore (56% of the revenue receipts) will be devolved by the centre in the form of grants and the state’s share in central taxes.
- Non-tax revenue: Madhya Pradesh is estimated to generate Rs 13,968 crore through non-tax sources in 2019-20. Non-tax sources include general services (Rs 2,104 crore), dividends and profits (Rs 370 crore), and interest receipts (Rs 350 crore), among others. This is an increase of 44.6% (Rs 4,311 crore) over the revised estimate of 2018-19.
Table 5: Break up of state government receipts in 2019-20 (Rs crore)
|
Items |
2017-18 Actuals |
2018-19 Budgeted |
2018-19 Revised |
% change from BE 2018-19 to RE of 2018-19 |
2019-20 Budgeted |
% change from RE 2018-19 to BE 2019-20 |
|
State's Own Tax |
44,811 |
54,655 |
52,771 |
-3.4% |
65,274 |
23.7% |
|
State's Own Non-Tax |
9,061 |
10,934 |
9,657 |
-11.7% |
13,968 |
44.6% |
|
Share in Central Taxes |
50,853 |
59,490 |
57,487 |
-3.4% |
63,751 |
10.9% |
|
Grants-in-aid from Centre |
30,150 |
30,808 |
31,245 |
1.4% |
36,361 |
16.4% |
|
Total Revenue Receipts |
1,34,875 |
1,55,886 |
1,51,160 |
-3.0% |
1,79,354 |
18.7% |
|
Borrowings |
21,892 |
37,840 |
37,274 |
-1.5% |
42,984 |
15.3% |
|
Other receipts |
5,089 |
4,019 |
508 |
-87.4% |
2,625 |
417.2% |
|
Total Capital Receipts |
26,981 |
41,859 |
37,782 |
-9.7% |
45,609 |
20.7% |
|
Total Receipts |
1,61,856 |
1,97,745 |
1,88,941 |
-4.5% |
2,24,963 |
19.1% |
Sources: Madhya Pradesh Budget Documents 2019-20; PRS.
- Tax Revenue: Total own tax revenue of Madhya Pradesh is estimated to be Rs 65,274 crore in 2019-20 (36% of the revenue receipts). This is 23.7% higher than the revised estimate of 2018-19. In 2018-19 revised estimate, own tax revenue is expected to be Rs 52,771, 3.4% lower than the budgeted estimate.
- The own tax to GSDP ratio is targeted at 6.8% in 2019-20, which is higher than the revised estimates of 6.3% in 2018-19. This implies that growth in collection of taxes has been higher than the growth in the economy.
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Figure 2: Composition of the state’s tax revenue in 2019-20 (Budget Estimates)
Sources: Madhya Pradesh Budget in Brief 2019-20; PRS. |
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Deficits, Debts and FRBM Targets for 2019-20
The Madhya Pradesh Fiscal Responsibility and Budget Management Act, 2005 provides annual targets to progressively reduce the outstanding liabilities, revenue deficit, and fiscal deficit of the state government.
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Debt Servicing In 2019-20, Madhya Pradesh is expected to spend Rs 29,235 crore on servicing its debt, which is 13% of its estimated expenditure. This expenditure includes Rs 14,803 crore towards repayment of loans, and Rs 14,432 crore towards interest payments. In 2019-20, the expenditure on repayment of loans is expected to increase by 41.6% over the revised estimate of 2018-19. |
Revenue deficit: This 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 surplus of Rs 733 crore (or 0.08% of GSDP) in 2019-20. This is 433.6% higher than the revised estimates of 2018-19. This implies that revenue receipts are expected to be higher than the revenue expenditure, resulting in a surplus. The 14th Finance Commission had recommended that states should eliminate revenue deficits. The 2019-20 estimates for Madhya Pradesh suggest that the state will meet this target of eliminating revenue deficit. Note that, Madhya Pradesh has had a revenue surplus for the past two years.
Fiscal deficit: This 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 2019-20, Madhya Pradesh’s fiscal deficit is estimated to be Rs 32,106 crore, which is 3.34% of the GSDP. The estimate is higher than the 3% limit prescribed by the 14th Finance Commission. Note that, in 2018-19, fiscal deficit increased by 6.8% from Rs 28,612 crore (3.40% of GSDP), as per the budgeted estimate, to Rs 32,106 crore (3.34% of GSDP), as per the revised estimate.
Outstanding liabilities: This is the accumulation of borrowings taken by the state government over the years. In 2019-20, Madhya Pradesh’s outstanding liabilities are expected to be at 24.4% of the GSDP.
Table 6: Budget targets for deficits for Madhya Pradesh in 2019-20 (% of GSDP)
|
Year |
Revenue |
Fiscal |
Outstanding Liabilities |
|
Deficit (-)/Surplus (+) |
Deficit (-)/Surplus (+) |
||
|
2017-18 |
0.7% |
-3.2% |
24.4% |
|
2018-19 (RE) |
0.0% |
-3.4% |
24.1% |
|
2019-20 (BE) |
0.1% |
-3.3% |
24.4% |
|
2020-21 |
Revenue Surplus |
-2.8% |
24.6% |
|
2021-22 |
Revenue Surplus |
-2.8% |
24.8% |
Sources: Medium Term Fiscal Policy; Madhya Pradesh Budget Documents, July 2019; PRS.
Figures 3 shows the trend in deficits targets from 2017-18 to 2019-20. Figure 4 shows the trend in outstanding liabilities targets from 2017-18 to 2021-22.
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Figure 3: Revenue and Fiscal Deficit (as % of GSDP)
Sources: Madhya Pradesh Budget Documents; PRS. |
Figure 4: Outstanding liabilities targets (as % of GSDP)
Sources: Madhya Pradesh Budget Documents; PRS. |
Annexure
The graphs below compare Madhya Pradesh’s expenditure on six key sectors as a proportion of its total budget, with 26 other states.[1]
- Education: Madhya Pradesh has allocated 15.1% of its expenditure on education in 2019-20. This is lower than the average expenditure allocated to education by other states (using 2018-19 BE) (15.9%).
- Health: Madhya Pradesh has allocated 4.9% of its expenditure on health, which is higher than the average expenditure by other states (4.5%).
- Agriculture and allied activities: The state has allocated 11.4% of its total budget towards agriculture and allied activities. This is significantly higher than the average allocation by other states (6.5%).
- Rural development: Madhya Pradesh has allocated 7.1% of its expenditure on rural development. This is higher than the average expenditure (6.1%) by other states.
- Police: Madhya Pradesh has allocated 3.4% of its total expenditure on police, which is lower than the average expenditure by other states (3.9%).
- Roads and bridges: Madhya Pradesh has allocated 3.9% of its total expenditure on roads and bridges, which is lower than the average expenditure by other states (4.3%).
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Note: 2017-18, 2018-19 (BE), 2018-19 (RE), and 2019-20 (BE) figures are for Madhya Pradesh.
Source: Annual Financial Statement of Madhya Pradesh 2019-20, July 2019; various state budgets; PRS.
[1] The 26 other states include all states except Arunachal Pradesh, Manipur, and Meghalaya. It also includes the Union Territory of Delhi.
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