Arunachal Pradesh Budget Analysis 2024-25

The Deputy Chief Minister of Arunachal Pradesh, Mr. Chowna Mein, presented the Budget for the state for the financial year 2024-25 on July 24, 2024.

Budget Highlights

• Expenditure (excluding debt repayment) in 2024-25 is estimated to be Rs 34,270 crore, an increase of 3.6% over the revised estimates of 2023-24.  In addition, debt of Rs 1,195 crore will be repaid by the state.

• Receipts (excluding borrowings) for 2024-25 are estimated to be Rs 31,277 crore, an increase of 6.7% compared to the revised estimate of 2023-24.

• Revenue surplus in 2024-25 is estimated to be 11.2% of GSDP (Rs 5,335 crore), lower than the revised estimates for 2023-24 (11.9% of GSDP).  In 2023-24, the revenue surplus is expected to be higher than the budget estimate (8.1% of GSDP).

• Fiscal deficit for 2024-25 is targeted at 6.3% of GSDP (Rs 2,993 crore).   In 2023-24, as per the revised estimates, fiscal deficit is expected to be 7.8% of GSDP, higher than the budget estimate for 2023-24 (6.6%).

Policy Highlights

• Tourism: Promotion of eco-tourism will be given priority.  This will involve development of lakes and wildlife sanctuaries such as the Daying Ering Wildlife Sanctuary.

• Dulari Kanya Scheme: The scheme will be revamped to offer incentives up to Rs 50,000 to women enrolling in graduation or professional courses.

• Agriculture:  A new ‘farm to fork’ Agricultural and Horticultural Policy will be notified.  It will focus on natural farming, enhanced market linkages and export of fruits, vegetables, and flowers.

Arunachal Pradesh’s Economy GSDP:  In 2023-24, state’s GSDP (at constant prices) grew at 9.5%, compared to 7% in 2022-23.  In comparison, national GDP is estimated to grow at 8.2% in 2023-24. Sectors:  At constant prices, the agriculture sector grew by 1.2% in 2023-24.  In comparison, it had witnessed 2.6% growth in 2022-23.  Manufacturing sector grew by 12% in 2023-24, compared to 13% in 2022-23.  Services grew by 8% in 2023-24.  In comparison, it had grown by 13% in 2022-23. In 2023-24, agriculture, manufacturing, and services sectors are estimated to contribute 36%, 24%, and 40% to the economy, respectively (at current prices). Per capita GSDP:  The per capita GSDP of Arunachal Pradesh in 2023-24 (at current prices) is estimated at Rs 2,80,380, an increase of 10% over 2022-23.

Figure  1 : Growth in GSDP and sectors in Arunachal Pradesh at constant prices (2011-12) Note: Agriculture also includes mining and quarrying; manufacturing also includes construction, and electricity, gas, water, and other utility services.  These numbers are as per constant prices (2011-12) which implies that the growth rate is adjusted for inflation. Sources: Arunachal Pradesh Budget Documents for 2024-25; PRS.

 Budget Estimates for 2024-25

• Total expenditure (excluding debt repayment) in 2024-25 is targeted at Rs 34,270 crore.  This is an increase of 3.6% over the revised estimate of 2023-24.   This expenditure is proposed to be met through receipts (excluding borrowings) of Rs 31,277 crore and net borrowings of Rs 3,369 crore.  In 2023-24, revised estimate for expenditure (other than debt repayment) saw an increase of 15.3% compared to the budget estimate.   This was primarily due to higher capital outlay.  Net receipts for 2024-25 (other than borrowings) are expected to register an increase of 6.7% over the revised estimate of 2023-24.  Revised estimate for receipts (excluding borrowings) in 2023-24 were 12% higher compared to the budget estimate.  The increase was due to higher grants-in-aid from centre.

• Revenue surplus in 2024-25 is estimated to be 11.2% of GSDP (Rs 5,335 crore), lower than the revised estimates for 2023-24 (11.9% of GSDP).  Fiscal deficit for 2024-25 is targeted at 6.3% of GSDP (Rs 2,993 crore), lower than the revised estimates for 2023-24 (7.8% of GSDP).

Table  1 : Budget 2024-25 - Key figures (in Rs crore)

Items	2022-23 Actuals	2023-24 Budgeted	2023-24 Revised	% change from BE 23-24 to RE 23-24	2024-25 Budgeted	% change from RE 23-24 to BE 24-25
Total Expenditure	26,081	29,513	33,989	15.2%	35,465	4.3%
(-) Repayment of debt	551	830	909	9.5%	1,195	31.5%
Net Expenditure (E)	25,530	28,683	33,081	15.3%	34,270	3.6%
Total Receipts	26,271	29,657	34,056	14.8%	35,841	5.2%
(-) Borrowings	2,480	3,490	4,733	35.6%	4,563	-3.6%
Net Receipts (R)	23,792	26,168	29,323	12.1%	31,277	6.7%
Fiscal Deficit (E-R)	1,738	2,515	3,758	49.4%	2,993	-20.4%
as % of GSDP	4.6%	6.6%	7.8%		6.3%
Revenue Surplus	6,370	3,063	5,711	86.5%	5,335	-6.6%
as % of GSDP	16.8%	8.1%	11.9%		11.2%
Primary Deficit	904	1,623	2,846	75.3%	2,037	-28.4%
as % of GSDP	2.4%	4.3%	5.9%		4.3%
GSDP	37,870	37,870	48,028	26.8%	47,823	-0.4%

Note: BE is Budget Estimates; RE is Revised Estimates.  Calculation for fiscal deficit includes 50 years interest free special assistance loans given by the Centre for capital expenditure.
Sources: Annual Financial Statement, Arunachal Pradesh Budget 2024-25; PRS.

Expenditure in 2024-25

Revenue expenditure for 2024-25 is proposed to be Rs 25,932 crore, an increase of 10% over the revised estimate of 2023-24.  This includes the expenditure on salaries, pension, interest, grants, and subsidies. Capital outlay for 2024-25 is proposed to be Rs 8,335 crore, a decrease of 12% over the revised estimate of 2023-24.  Capital outlay includes the expenditure towards creation of assets.  In 2023-24, revised estimate for capital outlay is 70% higher than budget estimate.  This was driven by higher capital outlay on sectors such as police, education, agriculture, irrigation, and transport.

Table  2 :  Expenditure budget 2024-25 (in Rs crore)

Items	2022-23 Actuals	2023-24 Budgeted	2023-24 Revised	% change from BE 23-24 to RE 23-24	2024-25 Budgeted	% change from RE 23-24 to BE 24-25
Revenue Expenditure	17,418	23,095	23,602	2%	25,932	10%
Capital Outlay	8,107	5,584	9,475	70%	8,335	-12%
Loans given by the state	5	4	4	-14%	3	-16%
Net Expenditure	25,530	28,683	33,081	15.3%	34,270	4%

Sources:  Annual Financial Statement, Arunachal Pradesh Budget 2024-25; PRS.

Committed expenditure: Committed expenditure of a state typically includes expenditure on payment of salaries, pension, and interest. A larger proportion of budget allocated for committed expenditure items limits the state’s flexibility to decide on other expenditure priorities such as capital outlay.  In 2024-25, Arunachal Pradesh is estimated to spend Rs 13,181 crore on committed expenditure, which is 42% of its estimated revenue receipts.  This comprises spending on salaries (32% of revenue receipts), pension (7%), and interest payments (3%).  In 2023-24, expenditure towards salaries and pension are estimated to be 23% and 16% lower than the budget estimate respectively.  In 2022-23, as per actuals, 37% of revenue receipts were spent towards committed expenditure.

Table  3 : Committed Expenditure in 2024-25 (in Rs crore)

Committed Expenditure	2022-23 Actuals	2023-24 Budgeted	2023-24 Revised	% change from BE 23-24 to RE 23-24	2024-25 Budgeted	% change from RE 23-24 to BE 24-25
Salaries	6,233	8,935	6,838	-23%	9,920	45%
Pension	1,665	2,519	2,117	-16%	2,305	9%
Interest payment	834	892	912	2%	956	5%
Total Committed Expenditure	8,733	12,346	9,867	-20%	13,181	34%

Sources: Annual Financial Statement, Arunachal Pradesh Budget 2024-25; PRS.

Sector-wise expenditure: The sectors listed below account for 65% of the total expenditure on sectors by the state in 2024-25.  A comparison of Arunachal Pradesh’s expenditure on key sectors with that by other states is shown in Annexure 1.

Table  4 : Sector-wise expenditure under Arunachal Pradesh Budget 2024-25 (in Rs crore)

Sector	2022-23 Actuals	2023-24 Budgeted	2023-24 Revised	2024-25 Budgeted	% change from RE 23-24 to BE 24-25
Roads and Bridges	4,654	3,272	6,045	4,210	-30%
Education, Sports, Arts, and Culture	3,034	2,838	3,594	4,087	14%
Energy	1,969	2,158	2,769	2,733	-1%
Agriculture and Allied Activities	1,700	2,179	2,399	2,657	11%
Health and Family Welfare	1,578	1,500	1,791	1,767	-1%
Police	1,346	1,319	1,474	1,689	15%
Rural Development	1,179	946	1,665	1,549	-7%
Water Supply and Sanitation	1,064	1,214	1,485	1,350	-9%
Social Welfare and Nutrition	720	951	1,002	1,148	15%
Irrigation and Flood Control	698	631	1,205	1,147	-5%
% of total expenditure on all sectors	70%	59%	71%	65%

Sources: Annual Financial Statement, Arunachal Pradesh Budget 2024-25; PRS. 

Receipts in 2024-25

• Total revenue receipts for 2024-25 are estimated to be Rs 31,267 crore, an increase of 7% over the revised estimate of 2023-24.  Of this, Rs 4,007 crore (13%) will be raised by the state through its own resources, and Rs 27,261 crore (87%) will come from the centre.  Resources from the centre will be in the form of state’s share in central taxes (68% of revenue receipts) and grants (19% of revenue receipts).

• Devolution:  In 2024-25, state’s share in central taxes is estimated at Rs 21,432 crore, an increase of 10% over the revised estimate of 2023-24.

• Grants from the centre in 2024-25 are estimated at Rs 5,829 crore, a decrease of 9% over the revised estimates for 2023-24.  In 2023-24, revised estimate for grants from the centre is 34% higher than budget estimate.   This was primarily due to an increase of Rs 1,630 crore (41%) in central assistance for centrally sponsored schemes. 

• State’s own tax revenue:  Arunachal Pradesh’s total own tax revenue is estimated to be Rs 2,953 crore in 2024-25, an increase of 15% over the revised estimate of 2023-24.  Own tax revenue as a percentage of GSDP is estimated at 6.2% in 2024-25, higher than the revised estimates for 2023-24 (5.3%).  As per the actual figures for 2022-23, own tax revenue as a percentage of GSDP was 5.9%.

Table  5 : Break-up of the state government’s receipts (in Rs crore)

Items	2022-23 Actuals	2023-24 Budgeted	2023-24 Revised	% change from BE 2023-24 to RE 2023-24	2024-25 Budgeted	% change from RE 2023-24 to BE 2024-25
State's Own Tax	2,237	2,565	2,568	0%	2,953	15%
State's Own Non-Tax	1,018	848	911	7%	1,054	16%
Share in Central Taxes	16,689	17,947	19,406	8%	21,432	10%
Grants-in-aid from Centre	3,844	4,798	6,428	34%	5,829	-9%
Revenue Receipts	23,788	26,158	29,313	12%	31,267	7%
Non-debt Capital Receipts	3	10	10	0%	10	0%
Net Receipts	23,792	26,168	29,323	12.1%	31,277	7%

Note: BE is Budget Estimates; RE is Revised Estimates. 
Sources: Annual Financial Statement, Arunachal Pradesh Budget 2024-25; PRS.

In 2024-25, State GST is estimated to be the largest source of own tax revenue (74% share).  In 2024-25, all major sources of the state’s own-tax revenue are expected to see an increase of 15% compared to the revised estimates of 2023-24.

Table  6 :  Major sources of state’s own-tax revenue (in Rs crore)

Head	2022-23 Actuals	2023-24 Budgeted	2023-24 Revised	% change from BE 23-24 to RE 23-24	2024-25 Budgeted	% change from RE 23-24 to BE 24-25
State GST	1,607	1,959	1,912	-2%	2,199	15%
Sales Tax/ VAT	222	288	321	12%	369	15%
State Excise	281	242	256	6%	294	15%
Taxes on Vehicles	62	40	41	2%	47	15%
Land Revenue	48	22	24	7%	27	15%
Stamps Duty and Registration Fees	18	14	14	-1%	16	15%

Sources: Annual Financial Statement, Arunachal Pradesh Budget 2024-25; PRS.

Deficits, Debt, and FRBM Targets for 2024-25

The Arunachal Pradesh Fiscal Responsibility and Budget Management Act, 2006 provides annual targets to progressively reduce the outstanding liabilities, revenue deficit, and fiscal deficit of the state government.

Revenue surplus:  It is the difference of revenue expenditure and revenue receipts.  A revenue surplus implies that the government doesn’t need borrow to finance its revenue expenditure.  The budget estimates a revenue surplus of Rs 5,335 crore (or 11.2% of the GSDP) in 2024-25.

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 2024-25, the fiscal deficit is estimated to be 6.3% of GSDP.  Fiscal deficit includes borrowings and 50-year interest free capital expenditure loans from the central government which is over and above the borrowing limit.  For 2024-25, the central government has permitted fiscal deficit of up to 3.5% of GSDP to states, of which 0.5% of GSDP will be available only upon carrying out certain power sector reforms. 

As per the revised estimates, in 2023-24, the fiscal deficit of the state is expected to be 7.8% of GSDP.  This is higher than the budget estimate of 2023-24 (6.6%). 

Outstanding liabilities:  Outstanding liabilities is the accumulation of total borrowings at the end of a financial year.  It also includes any liabilities on public account.  At the end of 2024-25, the outstanding liabilities are estimated to be 48% of GSDP, higher than the revised estimate for 2023-24 (41% of GSDP).  The outstanding liabilities significantly increased in 2021-22 (47% of GSDP), and have stayed high thereafter.

Figure  2 : Revenue and Fiscal Balance (% of GSDP)   Note: *Figures for 2025-26 and 2026-27 are projections;  RE is Revised Estimates; BE is budget estimates; Fiscal deficit between 2022-23 and 2024-25 have not been adjusted for capital expenditure loans from the central government. Sources: FRBM Statements, Arunachal Pradesh Budget 2024-25; PRS.

Figure  3 : Outstanding Liabilities (as % of GSDP) Note: *Figures for 2025-26 and 2026-27 are projections; RE is Revised Estimates; BE is budget estimates. Sources: Medium Term Fiscal Policy, Arunachal Pradesh Budget 2024-25; PRS.

Annexure 1:  Comparison of states’ expenditure on key sectors

The graphs below compare Arunachal Pradesh’s expenditure in 2024-25 on six key sectors as a proportion of its total expenditure on all sectors.  The average for a sector indicates the average expenditure in that sector by 31 states (including Arunachal Pradesh) as per their budget estimates of 2023-24. [1]

• Education:  Arunachal Pradesh has allocated 11.9% of its expenditure on education in 2024-25.  This is lower than the average allocation for education by states in 2023-24 (14.7%).

• Health:  Arunachal Pradesh has allocated 5.2% of its total expenditure towards health, which is lower than the average allocation for health by states (6.2%).

• Rural development:  Arunachal Pradesh has allocated 4.5% of its expenditure on rural development.  This is lower than the average allocation for rural development by states (5%).

• Police:  Arunachal Pradesh has allocated 4.9% of its expenditure towards police.  This is higher than the average allocation towards police by states (4.2%).

• Agriculture:  Arunachal Pradesh has allocated 7.8% of its total expenditure towards agriculture, which is higher than the average expenditure on agriculture by states (5.9%).

• Energy:  Arunachal Pradesh has allocated 8% of its total expenditure towards energy, which is significantly higher than the average allocation by states (4.7%).

Note: 2022-23, 2023-24 (BE), 2023-24 (RE), and 2024-25 (BE) figures are for Arunachal Pradesh
Sources: Annual Financial Statement, Arunachal Pradesh Budget 2024-25; various state budgets; PRS.

[1]  The 31 states include the Union Territories of Delhi, Jammu and Kashmir, and Puducherry.

Annexure 2:  Comparison of 2022-23 Budget Estimates and Actuals

The following tables compare the actuals of 2022-23 with budget estimates for that year.

Table  7 :Overview of Receipts and Expenditure (in Rs crore)

Particular	2022-23 BE	2022-23 Actuals	% change from BE to Actuals
Net Receipts (1+2)	24,249	23,792	-2%
1. Revenue Receipts (a+b+c+d)	24,239	23,788	-2%
a. Own Tax Revenue	2,090	2,237	7%
b. Own Non-Tax Revenue	935	1,018	9%
c. Share in central taxes	14,349	16,689	16%
d. Grants-in-aid from the Centre	6,865	3,844	-44%
Of which GST compensation grants
2. Non-Debt Capital Receipts	10	3	-66%
3. Borrowings	1,863	2,480	33%
Of which GST compensation loan	-	-
Net Expenditure (4+5+6)	24,908	34,044	37%
4. Revenue Expenditure	18,202	25,932	42%
5. Capital Outlay	6,701	8,107	21%
6. Loans and Advances	6	5	-14%
7. Debt Repayment	801	551	-31.2%
Revenue Surplus	6,037	6,370	6%
Revenue Surplus (as % of GSDP)	20.6%	16.8%
Fiscal Deficit	660	1,738	163%
Fiscal Deficit (as % of GSDP)	2.2%	4.6%

Source: Arunachal Pradesh Budget Documents of various years; PRS.

Table  8 : Key Components of State's Own Tax Revenue

Tax Source/Head	2022-23 BE	2022-23 Actuals	% change from BE to Actuals
Sales Tax/ VAT	434	222	-49%
State Excise	253	281	11%
State GST	1,344	1,607	20%
Stamps Duty and Registration Fees	11	18	62%
Taxes on Vehicles	30	62	109%
Land Revenue	18	48	171%

Source: Arunachal Pradesh Budget Documents of various years; PRS.

Table  9 : Allocation towards Key Sectors

Sector	2022-23 BE	2022-23 Actuals	% change from BE to Actuals
Social Welfare and Nutrition	996	720	-28%
Agriculture and Allied Activities	2,032	1,700	-16%
Police	1,398	1,346	-4%
Energy	1,723	1,969	14%
Rural Development	1,012	1,179	16%
Water Supply and Sanitation	910	1,064	17%
Education, Sports, Arts, and Culture	2,528	3,034	20%
Health and Family Welfare	1,287	1,578	23%
Irrigation and Flood Control	493	698	42%
Transport	3,422	4,923	44%
of which Roads and Bridges	3,214	4,654	45%
Urban Development	372	593	59%
Housing	59	95	62%
Welfare of SC, ST, OBC, and Minorities	-	11	-

Source: Arunachal Pradesh Budget Documents of various years; PRS.