Haryana Budget Analysis 2022-23

The Chief Minister of Haryana, Mr. Manohar Lal Khattar, presented the Budget for the state for the financial year 2022-23 on March 8, 2022.

Budget Highlights

• The Gross State Domestic Product (GSDP) of the state for 2022-23 (at current prices) is projected to be Rs 9,94,195 crore. This is a growth of 11% over the revised estimate of GSDP for 2021-22 (Rs 8,95,671 crore). In 2021-22, GSDP is estimated to grow at 18% over the previous year (at current prices).
   
• Expenditure (excluding debt repayment) in 2022-23 is estimated to be Rs 1,42,204 crore, a 14% increase over the revised estimates of 2021-22 (Rs 1,25,223 crore). In addition, debt of Rs 35,052 crore will be repaid by the state in 2022-23. In 2021-22, expenditure (excluding debt repayment) is estimated to be 2% lower than the budget estimate.
   
• Receipts (excluding borrowings) for 2022-23 are estimated to be Rs 1,07,192 crore, an increase of 15% from the revised estimates of 2021-22 (Rs 93,488 crore). In 2021-22, receipts (excluding borrowings) are estimated to be 6% higher than the budget estimate (Rs 88,480 crore).  
   
• Fiscal deficit for 2022-23 is targeted at Rs 35,012 crore (3.52% of GSDP). In 2021-22, as per the revised estimates, fiscal deficit is expected to be 3.54% of GSDP, lower than the budget estimate of 4.40% of GSDP.
   
• Revenue deficit for 2022-23 is estimated to be Rs 9,774 crore, which is 0.98% of the GSDP.  In 2021-22, the state is estimated to observe a revenue deficit of 1.40% of GSDP, as compared to a revenue deficit of 3.29% of GSDP estimated at the budget stage.

Policy Highlights

• Support to Urban Local Bodies (ULBs): The Divya Nagar Scheme will be introduced to for the development of infrastructural projects (such as public libraries, and sports facilities) in ULBs.
   
• Healthcare: Families with an annual income of up to Rs 1.8 lakh will be provided free basic health check-up once in every two years. 
   
• Reimbursement on VAT for MSME sector: Industries in the MSME sector will be provided a 50% reimbursement on VAT collected on natural gas (piped or compressed).  

Haryana’s Economy GSDP: Haryana’s GSDP (at constant prices) saw a negative growth of 5.7% in 2020-21. In comparison, national GDP registered a negative growth of 6.6% in 2020-21. In 2020-21, the manufacturing and services sector of Haryana witnessed a contraction of 9.7% and 5.7% respectively.    Sectors: In 2020-21, at current prices, agriculture, manufacturing, and services sectors contributed to 21%, 28%, and 51% of the economy, respectively.   Per capita GSDP: The per capita GSDP of Haryana in 2020-21 (at current prices) was Rs 2,63,649; 3.4% lower than the corresponding figure in 2019-20 (Rs 2,72,884). The per capita GDP of Haryana in 2020-21 (at current prices) was significantly higher than the per capita GDP at the national level (Rs 1,46,087 at current prices).

Figure  1 : Growth in GSDP and sectors in Haryana at constant (2011-12) prices    Note: These numbers are as per constant (2011-12) prices which implies that the growth rate is adjusted for inflation. Sources: Ministry of Statistics and Programme Implementation; PRS.

Table  1 : Budget 2022-23 - Key figures (in Rs crore)

Items	2020-21 Actuals	2021-22 Budgeted	2021-22 Revised	% change from BE 2021-22 to RE 2021-22	2022-23 Budgeted	% change from RE 2021-22 to BE 2022-23
Total Expenditure	1,26,240	1,55,645	1,53,384	-1%	1,77,256	16%
(-) Repayment of debt	29,498	28,161	28,162	0%	35,052	24%
Net Expenditure (E)	96,742	1,27,484	1,25,223	-2%	1,42,204	14%
Total Receipts	1,21,810	1,46,794	1,39,988	-5%	1,62,255	16%
(-) Borrowings	53,817	58,314	46,500	-20%	55,063	18%
Net Receipts (R)	67,993	88,480	93,488	6%	1,07,192	15%
Fiscal Deficit (E-R)	28,749	39,004	31,734	-19%	35,012	10%
as % of GSDP	3.79%	4.40%	3.54%	3.52%
Revenue Deficit	22,386	29,194	12,523	-57%	9,774	-22%
as % of GSDP	2.95%	3.29%	1.40%	0.98%
Primary Deficit	11,634	19,227	12,344	-36%	14,018	14%
as % of GSDP	1.53%	2.17%	1.38%	1.41%

Note: BE: Budget Estimates; RE: Revised Estimates.
Sources: Haryana Budget Documents 2022-23; PRS.

Revenue expenditure in 2022-23 is estimated to be 1,16,199 crore, which is an increase of 11% over the revised estimate of 2021-22 (Rs 1,05,119 crore). This expenditure includes the payment of salaries, pensions, interest, and subsidies. In 2021-22, as per the revised estimates, revenue expenditure is estimated to be 10% lower than the budget estimate.   Capital outlay in 2022-23 is estimated to be Rs 22,344 crore, which is an increase of 51% over the revised estimate of 2021-22. Capital outlay comprises expenditure towards creation of assets. This includes expenditure on building schools, hospitals, and roads and bridges. In 2021-22, capital outlay is estimated to be 59% higher than the budget estimate. Note that the state is estimating Rs 1,100 crore from the central government as loans for capital asset creation. In the 2022-23 Union Budget, it was announced that one lakh crore rupees will be allocated to states for catalysing investments, in the form of 50 year interest free loans.

Committed Expenditure In 2020-21 (actuals), Haryana’s committed expenditure was Rs 48,750 crore which was 72% of its revenue receipts. Committed expenditure of a state typically includes expenditure on payment of salaries, pensions, and interest.   In 2021-22 BE, states on aggregate budgeted to spend 55% of their revenue receipts on committed expenditure.  However, Haryana estimated to spend 63% of its revenue receipts on committed expenditure.  Note that in the revised estimates of 2021-22, Haryana has estimated to spend 58% of its revenue receipts on committed expenditure and 57% in 2022-23. Increased committed expenditure leaves less room for spending on capital outlay.  In 2020-21, the state’s capital outlay was Rs 5,870 crore which was 56% lower than the budget estimates (Rs 13,201 crore).

Table  2 : Expenditure Budget 2022-23 (in Rs crore)

Items	2020-21 Actuals	2021-22 Budgeted	2021-22 Revised	% change from BE 2021-22 to RE 2021-22	2022-23 Budgeted	% change from RE 2021-22 to BE 2022-23
Revenue Expenditure	89,947	1,16,927	1,05,119	-10%	1,16,199	11%
Capital Outlay	5,870	9,318	14,772	59%	22,344	51%
Loans given by the state	926	1,239	5,331	330%	3,662	-31%
Net Expenditure	96,742	1,27,484	1,25,223	-2%	1,42,204	14%

Sources: Haryana Budget Documents 2022-23; PRS.

Committed expenditure: Committed expenditure of a state typically includes expenditure on payment of salaries, pensions, and interest.  Allocation of a large portion of the budget towards committed expenditure items limits the state’s flexibility to decide on other expenditure priorities such as developmental schemes and capital outlay.  In 2022-23, Haryana is estimated to spend Rs 60,633 crore on committed expenditure items, which is 57% of its revenue receipts.  This comprises spending on salaries (27% of revenue receipts), interest payments (20%), and pension (11%).  Committed expenditure in 2022-23 is estimated to increase by 12% over the revised estimate of 2021-22.  Spending on salaries is estimated to increase by 19% and spending on interest payments and pension is estimated to increase by 8% and 4% respectively.    

Table  3 : Committed Expenditure in 2022-23 (in Rs crore)

Committed Expenditure	2020-21 Actuals	2021-22 Budgeted	2021-22 Revised	% change from BE 2021-22 to RE 2021-22	2022-23 Budgeted	% change from RE 2021-22 to BE 2022-23
Salaries	21,923	26,478	23,894	-10%	28,438	19%
Pension	9,713	9,200	10,801	17%	11,201	4%
Interest	17,115	19,776	19,390	-2%	20,994	8%
Committed Expenditure	48,750	55,454	54,084	-2%	60,633	12%

Sources: Haryana Budget Documents 2022-23; PRS.

Sector-wise expenditure: The sectors listed below account for 63% of the total expenditure on sectors by the state in 2022-23.  A comparison of Haryana’s expenditure on the key sectors with that by other states is shown in Annexure 1.

Table  4 : Sector-wise expenditure under Haryana Budget 2022-23 (in Rs crore)

Sector	2020-21 Actuals	2021-22 Budgeted	2021-22 Revised	2022-23 Budgeted	% change from RE 2021-22 to BE 2022-23	Budget Provisions
Education, Sports, Arts, and Culture	14,439	18,891	16,570	19,711	19%	Rs 500 crore has been allocated to Sarva Shiksha Abhiyaan. Rs 321 crore has been allocated to Mid-Day Meals Scheme.
Social Welfare and Nutrition	9,751	9,970	10,840	12,098	12%	Rs 6,826 crore has been allocated for pension under social security schemes.
Health and Family Welfare	5,847	7,317	7,284	8,595	18%	Rs 883 crore has been allocated towards strengthening urban hospitals and dispensaries. Rs 52 crore has been allocated towards National Urban Health Mission.
Urban Development	4,181	5,155	7,345	7,990	9%	Rs 4,555 crore has been allocated towards capital outlay on urban development.
Energy	6,315	7,162	7,821	7,190	-8%	Rs 768 crore has been allocated towards capital outlay on power projects. Rs 483 crore has been allocated towards subsidised tariff to domestic consumers.
Rural Development	4,596	6,017	3,752	6,867	83%	Rs 105 crore has been allocated towards Swarnajayanti Gram Swarozgar Yojana.
Transport	3,956	5,161	6,494	6,533	1%	Rs 2,040 crore has been allocated towards capital outlay on roads and bridges.
Police	4,779	5,768	5,955	6,377	7%	Rs 4,641 crore has been allocated towards district police.
Irrigation and Flood Control	2,940	5,162	4,118	6,204	51%	Rs 1,879 crore has been allocated towards capital outlay on major irrigation.
Agriculture and allied activities	3,034	4,386	6,734	6,026	-11%	Rs 600 crore has been allocated towards Pradhanmantri Fasal Bima Yojana.
% of total expenditure on all sectors	62%	59%	64%	63%

Sources: Haryana Budget Documents 2022-23; PRS.

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

Items	2020-21 Actuals	2021-22 Budgeted	2021-22 Revised	% change from BE 2021-22 to RE 2021-22	2022-23 Budgeted	% change from RE 2021-22 to BE 2022-23
State's Own Tax	41,914	52,888	64,992	23%	73,728	13%
State's Own Non-Tax	6,961	10,851	9,227	-15%	12,205	32%
Share in Central Taxes	6,438	7,275	8,683	19%	8,926	3%
Grants from Centre	12,248	16,720	9,695	-42%	11,566	19%
Revenue Receipts	67,561	87,733	92,596	6%	1,06,425	15%
Non-debt Capital Receipts	432	747	893	19%	767	-14%
Net Receipts	67,993	88,480	93,488	6%	1,07,192	15%

Note: BE: Budget Estimates; RE: Revised Estimates.  
Sources: Haryana Budget Documents 2022-23; PRS.

In 2022-23, SGST is estimated to be the largest source of own tax revenue (45%).  SGST revenue in 2022-23 is estimated at Rs 32,825 crore, which is a 1% increase over the revised estimates of 2021-22.  In 2021-22 as per revised estimates, SGST revenue is estimated to be 33% higher than the budget estimate.    In 2022-23, revenue from state excise is expected to increase by 38% over revised estimates of 2021-22.  State excise is the third largest (16%) source of own tax revenue after SGST and sales tax/VAT in 2022-23.  Sales tax/VAT is estimated to increase by 16% in 2022-23 over 2021-22 revised estimates.

GST Compensation ends in June 2022 When the GST was introduced, the central government guaranteed states a 14% compounded annual growth in their GST revenue for a period of five years.  Any shortfall in a state’s GST revenue from this level is covered by the Centre by providing compensation grants to the state.  This guarantee ends in June 2022. During 2018-22, Haryana has relied on GST compensation grants to achieve the guaranteed SGST revenue level. In 2021-22, Haryana is estimated to receive Rs 9,715 crore in the form of GST compensation grants, which is about 15% of its own tax revenue.  Hence, beyond June 2022, Haryana might see a decline in the level of revenue receipts.

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

Head	2020-21 Actuals	2021-22 Budgeted	2021-22 Revised	% change from BE 2021-22 to RE 2021-22	2022-23 Budgeted	% change from RE 2021-22 to BE 2022-23
State GST	18,236	24,300	32,359	33%	32,825	1%
Sales Tax/ VAT	8,660	11,000	12,140	10%	14,100	16%
State Excise	6,864	9,200	8,710	-5%	12,030	38%
Stamps Duty and Registration Fees	5,157	5,000	8,100	62%	9,720	20%
Taxes on Vehicles	2,495	3,003	3,303	10%	4,450	35%
Land Revenue	17	25	25	0%	48	92%
Taxes and Duties on Electricity	476	345	345	0%	545	58%
GST Compensation Grants	5,066	9,200	2,321	-75%	2,400	3%
GST Compensation Loans	4,352	NA	NA	-	NA	-
Total GST Compensation	9,418	9,200	2,321	-75%	2,400	3%

Sources: Haryana Budget Documents 2022-23; PRS.

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.

Revenue Balance:   It is the difference of revenue expenditure and revenue receipts.  A revenue deficit implies that the government needs to borrow to finance its expenses which do not increase its assets or reduces its liabilities.  In 2022-23, Haryana is estimated to observe a revenue deficit of Rs 9,774 crore, which is 0.98% of the GSDP.  In 2020-21 the state observed a revenue deficit of Rs 22,386 crore (2.95% of GSDP).   According to 2021-22 revised estimates, Haryana is expected to have a revenue deficit of Rs 12,523 crore (1.40% GSDP).

15^th Finance Commission has recommended grants for eliminating revenue deficit to 17 states during the 2021-26 period.  Haryana will receive Rs 132 crore in 2021-22 as revenue deficit grants.  However, in the 2021-22 revised estimates Haryana is estimated to receive Rs 165 crore (25% increase from the budget estimates).  In 2022-23 revenue deficit grants are estimated to be Rs 658 crore.  Note that the 15^th Finance Commission recommended revenue deficit grants for Haryana only for 2021-22.  However, Haryana has budgeted revenue deficit grants in 2022-23.     

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 of the state government.  In 2022-23, the fiscal deficit is estimated to be Rs 35,012 crore (3.52% of GSDP).  It is lower than the limit of 4% of GSDP permitted by the central government in 2022-23 as per the Union Budget (of which, 0.5% of GSDP will be made available upon undertaking power sector reforms).  As per the revised estimates, in 2021-22, the fiscal deficit of the state is expected to be 3.54% of GSDP, which is more than the budget estimate of 4.40% of GSDP.  It is within the 4.5% limit permitted by the central government for 2021-22 (of which, 0.5% of GSDP becomes available upon undertaking power sector reforms).

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.   Outstanding liabilities are set to rise from 24.34% of GSDP in 2019-20 to 24.52% of GSDP in 2022-23.  

Figure  2 : Revenue and Fiscal Balance (% of GSDP)   Note: RE: Revised Estimates; BE: Budget Estimates.  A positive figure means a surplus, a negative figure means a deficit. Sources: Haryana Budget Documents 2022-23; PRS.

Figure  3 : Outstanding Liabilities (% of GSDP) Note: RE: Revised Estimates; BE: Budget Estimates. Sources: Haryana Budget Documents 2022-23; PRS.

 Annexure 1:  Comparison of states’ expenditure on key sectors

The graphs below compare Haryana’s expenditure 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 30 states (including Haryana) as per their budget estimates of 2021-22. [1]

• Education:  Haryana has allocated 14.2% of its total expenditure for education in 2022-23.  This is lower than the average allocation (15.2%) for education by all states (as per 2021-22 Budget Estimates).
   
• Health:  Haryana has allocated 6.2% of its total expenditure on health, which is higher than the average allocation for health by states (6%).
   
• Agriculture:  The state has allocated 4.3% of its total expenditure towards agriculture and allied activities.  This is lower than the average allocation for agriculture by states (6.2%).
   
• Rural development:  Haryana has allocated 5.0% of its expenditure on rural development.  This is lower than the average allocation for rural development by states (5.7%).
   
• Police:  Haryana has allocated 4.6% of its total expenditure on police, which is higher than the average expenditure on police by states (4.3%).
   
• Roads and bridges:  Haryana has allocated 2.1% of its total expenditure on roads and bridges, which is lower than the average allocation by states (4.7%).

Note: BE: Budget Estimates; RE: Revised Estimates; 2020-21, 2021-22 (BE), 2021-22 (RE), and 2022-23 (BE) figures are for Haryana.
Sources: Haryana Budget Documents 2022-23; various state budgets; PRS.

The following tables compare the actuals of 2020-21 with budget estimates for that year.

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

Particular	2020-21 BE	2020-21 Actuals	% change from BE to Actuals
Net Receipts (1+2)	67,970	67,993	0.0%
1. Revenue Receipts (a+b+c+d)	67,614	67,561	-0.1%
a. Own Tax Revenue	29,746	41,914	41%
b. Own Non-Tax Revenue	15,428	6,961	-55%
c. Share in central taxes	8,485	6,438	-24%
d. Grants-in-aid from the Centre	13,955	12,248	-12%
Of which GST compensation grants	7,000	5,066	-28%
2. Non-Debt Capital Receipts	356	432	21%
3. Borrowings	44,439	53,817	21%
Of which GST compensation loan	-	4,352	-
Net Expenditure (4+5+6)	1,19,752	96,742	-19%
4. Revenue Expenditure	1,05,338	89,947	-15%
5. Capital Outlay	13,201	5,870	-56%
6. Loans and Advances	1,213	926	-24%
7. Debt Repayment	22,592	29,498	31%
Revenue Deficit	15,374	22,386	46%
Revenue Deficit (as % of GSDP)	1.64%	2.95%	-
Fiscal Deficit	25,682	28,749	12%
Fiscal Deficit (as % of GSDP)	2.73%	3.79%	-

Note: *A negative revenue balance indicates a deficit.  BE: Budget Estimates.
Sources: Haryana Budget Documents of various years; PRS.

Table  8 : Key Components of State's Own Tax Revenue (in Rs crore)

Sector	2020-21 BE	2020-21 Actuals	% change from BE to Actuals
Land Revenue	28	17	-41%
Sales Tax/VAT	10,702	6,864	-36%
Stamps Duty and Registration Fees	7,500	5,157	-31%
Taxes on Vehicles	3,616	2,495	-31%
SGST	22,350	18,236	-18%
State Excise Duty	7,500	8,660	15%
Taxes and Duties on Electricity	360	476	32%

Note: BE: Budget Estimates.
Sources: Haryana Budget Documents of various years; PRS.

Table  9 : Allocation towards Key Sectors (in Rs crore)

Sector	2020-21 BE	2020-21 Actuals	% change from BE to Actuals
Agriculture and allied activities	5,950	3,034	-49%
Irrigation and Flood Control	5,020	2,940	-41%
Urban Development	6,549	4,181	-36%
Education, Sports, Arts, and Culture	20,169	14,439	-28%
Welfare of SC, ST, OBC, and Minorities	521	376	-28%
Transport	5,473	3,956	-28%
Rural Development	6,327	4,596	-27%
Roads and Bridges	3,008	2,187	-27%
Housing	197	154	-22%
Energy	7,437	6,315	-15%
Police	5,580	4,779	-14%
Water Supply and Sanitation	3,576	3,174	-11%
Health and Family Welfare	6,512	5,847	-10%
Social Welfare and Nutrition	10,168	9,751	-4%

Note: BE: Budget Estimates.
Sources: Haryana Budget Documents of various years; PRS.

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