Haryana Budget Analysis 2018-19

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) 3^rd and 4^th 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)

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)

 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)

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)

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 14^th 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 14^th 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)

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.

 

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