The Finance Minister of Madhya Pradesh, Mr. Jagdish Devda, presented the Budget for the state for the financial year 2021-22 on March 2, 2021.   Note that due to the impact of COVID-19, 2020-21 was not a standard year with respect to the performance of the economy and government finances.  In this note, 2021-22 budget estimates have been compared to the actuals for 2019-20 (in terms of compounded annual growth rate or CAGR).  A comparison of the revised estimates for 2020-21 and budget estimates for 2021-22 has been provided in the Annexure.

Budget Highlights

  • The Gross State Domestic Product (GSDP) of Madhya Pradesh for 2021-22 (at current prices) is projected to be Rs 11,32,116 crore.  This is equivalent to a 10% annual growth over 2019-20.  In 2021-22 GSDP is estimated to be 23.4% higher than the revised estimate of GSDP for 2020-21 (Rs 9,17,555 crore).  In 2020-21, GSDP (at current prices) is estimated to contract by 2.1% from the previous year.
     
  • Total expenditure for 2021-22 is estimated to be Rs 2,34,918 crore, an 11% annual increase over the expenditure in 2019-20.
     
  • Total receipts (excluding borrowings) for 2021-22 are estimated to be Rs 1,66,525 crore, an annual increase of 6% over the actual receipts for 2019-20.   In 2020-21, as per the revised estimates, total receipts (excluding borrowings) are estimated to be Rs 1,37,566 crore, which is 7% lower in comparison to 2019-20.
     
  • Revenue deficit for 2021-22 is estimated to be Rs 7,953 crore, which is 0.7% of the GSDP.  In 2020-21, as per the revised figures, revenue deficit is estimated at Rs 21,051 crore (2.29% of GSDP), as compared to the budgeted estimate of Rs 17,189 crore (1.81% of GSDP).  
     
  • Fiscal deficit for 2021-22 is targeted at Rs 50,598 crore (4.47% of GSDP).  In 2020-21, the revised estimate for fiscal deficit is expected to be 5.66% of GSDP, higher than the budget estimate of 4.96% of GSDP.
     
  • Sectors:  Allocation towards water supply and sanitation had the highest annual increase of 54% over 2019-20, followed by health and family welfare (10%), and education, sports, arts and culture (10%).  An annual decrease of 2% is seen in the allocation for construction of roads and bridges, and rural development between actual expenditure for 2019-20 and estimates for 2021-22. 

Policy Highlights

  • Agriculture:  The Mukhya Mantri Krishak Fasal Uparjan Sahayata Yojana will be introduced to provide financial aid to farmers through the Department for Civil Food Supplies and the state cooperative marketing federation.  The scheme has been allocated Rs 2,000 crore for 2021-22. 
     
  • Education:   The CM Rise scheme will be launched to upgrade 9,200 schools with modern infrastructure.  For 2021-22, the scheme has been allocated Rs 1,500 crore, to be used to modernise 350 schools.
     
  • Self-Employment: The Mukhya Mantri Swa-Rozgar Yojana will be launched to provide loans at low interest rates to encourage self-employment among youth.  The scheme has been allocated Rs 112 crore.

Madhya Pradesh’s Economy

  • GSDP:  Madhya Pradesh’s GSDP (at constant prices) grew by 7.6% in 2019-20.  In comparison, the country’s GDP growth rate was lower at 4%.
     
  • Sectors:     In 2019-20, agriculture, manufacturing, and services sectors contributed to 35%, 25%, and 40% of the economy.  
     
  • Per capita GSDP:  The per capita GSDP of Madhya Pradesh in 2019-20 (at constant prices) was Rs 67,770, which is 6% higher than the corresponding figure in 2018-19.
     
  • Unemployment:  As per the Periodic Labour Force Survey 2018-19 (for July 2018-June 2019), the unemployment rate in Madhya Pradesh was 3.5%, as compared to 5.8% in the country.

Figure  1 : Growth in GSDP and sectors in Madhya Pradesh at constant prices (2011-12)

 image

Note: These numbers are as per constant prices (2011-12) which implies that the growth rate is adjusted for inflation. Agriculture includes mining.

Sources: Ministry of Statistics and Programme Implementation; PRS.

Budget Estimates for 2021-22

  • Total expenditure in 2021-22 is targeted at Rs 2,34,918 crore.  This is an annual increase of 11% over 2019-20.  This expenditure is proposed to be met through receipts (other than borrowings) of Rs 1,66,525 crore and borrowings of Rs 67,258 crore.  Total receipts for 2021-22 (other than borrowings) are expected to register an annual increase of 6% over 2019-20.
     
  • As per the revised estimates for 2020-21, total expenditure is estimated to increase by 1% over the budget estimates.  In 2020-21, receipts (other than borrowings) are estimated to increase by 0.4% from the budget to revised stage.  Borrowings in 2020-21 are estimated to increase by 2% from the budget to revised stage.
     
  • The state expects a revenue deficit of Rs 7,953 crore in 2021-22 (0.7% of GSDP).  In 2020-21, revenue deficit is estimated to be Rs 21,051 crore at the revised stage, which is 22% higher as compared to the revenue deficit of Rs 17,189 crore estimated in the budget.  Fiscal deficit for 2021-22 is estimated to be Rs 50,598 crore (4.47% of GSDP).  In 2020-21, fiscal deficit is estimated to increase to 5.66% of GSDP at the revised stage as compared to 4.96% of GSDP estimated at the budget stage.    

Table  1 : Budget 2021-22 - Key figures (in Rs crore)

Items

2019-20 Actuals

2020-21 Budgeted

2020-21 Revised

% change from BE 2020-21 to RE 2020-21

2021-22 Budgeted

Annualised Change (2019-20 to 2021-22 BE)

Total Expenditure

1,91,606

2,00,343

2,01,631

1%

2,34,918

11%

A. Receipts (except borrowings)

1,47,812

1,36,962

1,37,566

0.4%

1,66,525

6%

B. Borrowings

34,364

63,448

64,411

2%

67,258

40%

Total Receipts (A+B)

1,82,176

2,00,410

2,01,976

1%

2,33,783

13%

Revenue Deficit

2,692

17,189

21,051

22%

7,953

72%

As % of GSDP

0.29%

1.81%

2.29%

0.70%

Fiscal Deficit

32,860

47,035

51,941

10%

50,598

24%

As % of GSDP

3.51%

4.96%

5.66%

4.47%

Primary Deficit

18,644

30,574

35,482

16%

29,655

26%

As % of GSDP

1.99%

3.22%

3.87%

2.62%

Note: BE is Budget Estimates; RE is Revised Estimates. The budget documents have not taken the revenue under head 0028 (other taxes on income and expenditure) into account for calculating tax revenue, so necessary adjustments have been made to the figures for the analysis.

Sources: Madhya Pradesh Budget Documents 2021-22; PRS.

Expenditure in 2021-22

Capital Outlay

Madhya Pradesh’s capital outlay for 2021-22 is estimated to be Rs 40,667 crore, which is an 18% annual increase over 2019-20.  The revised estimate for capital outlay in 2020-21 is Rs 29,671 crore which is 1.5% higher than the capital outlay in 2019-20.  Irrigation and flood control accounts for 21% of the total capital outlay, followed by water supply and sanitation (19%), roads and bridges (14%), and rural development (12%).

  • Capital expenditure for 2021-22 is proposed to be Rs 61,947 crore, which is an annual increase of 23% over the actual expenditure in 2019-20.  Capital expenditure includes expenditure affecting the assets and liabilities of the state, such as: (i) capital outlay, i.e., expenditure which leads to the creation of assets (such as bridges and hospitals), and (ii) repayment and grant of loans by the state government.  
     
  • Revenue expenditure for 2021-22 is proposed to be Rs 1,72,971 crore, which is an annual increase of 7% over 2019-20.  This expenditure includes the payment of salaries, pensions, and interest.   In 2020-21, revenue expenditure is estimated to be 3% higher than the budget estimate.
     
  • In 2021-22, expenditure on debt servicing is estimated to be Rs 38,737 crore, an annual increase of 24% over 2019-20.  This includes debt repayment of Rs 17,794 crore, and interest payment of Rs 20,943 crore. 

Table  2 : Expenditure budget 2021-22 (in Rs crore)

Items

2019-20 Actuals

2020-21 Budgeted

2020-21 Revised

% change from BE 2020-21 to RE 2020-21

2021-22 Budgeted

Annualised Change (2019-20 to 2021-22 BE)

Capital Expenditure

41,162 

    46,233 

  43,085 

-7%

     61,947 

23%

of which Capital Outlay

  29,241 

       28,350 

  29,671 

5%

      40,667 

18%

Revenue Expenditure

1,50,444 

    1,54,110 

1,58,545 

3%

  1,72,971 

7%

Total Expenditure

1,91,606 

   2,00,343 

 2,01,631 

1%

  2,34,918 

11%

A. Debt Repayment

10,934 

16,346 

12,124 

-26%

     17,794 

28%

B. Interest Payments

14,217 

16,460 

16,459 

0%

20,943 

21%

Debt Servicing (A+B)

25,150

32,806

28,583

-13%

38,737

24%

Note: BE is Budget Estimates; RE is Revised Estimates.  Capital outlay denotes expenditure which leads to the creation of assets.

Sources: Madhya Pradesh Budget Documents 2021-22; PRS. 

Sectoral expenditure in 2021-22

The sectors listed below account for 64% of the total expenditure on all sectors by the state in 2021-22.  A comparison of Madhya Pradesh’s expenditure on key sectors with that by other states is given in Annexure 1.  

Table  3 : Sector-wise expenditure under Madhya Pradesh Budget 2021-22 (in Rs crore)

Sector

2019-20 Actuals

2020-21

BE

2020-21

RE

2021-22

BE

Annualised Change (2019-20 to 2021-22 BE)

Budget provisions 2021-22

Education, Sports, Arts, and Culture

 30,271 

 33,408 

 32,010 

 36,344 

10%

  • Rs 9,793 crore has been allocated for the establishment of primary schools, and Rs 5,329 crore has been allocated for secondary education. 
  • Rs 4,027 crore has been allocated towards higher secondary education. 

Energy

 14,640 

 10,095 

 12,286 

 16,745 

7%

  • Rs 2,581 crore has been allocated to Atal Grah Jyoti Yojana.  

Agriculture and allied activities

 13,774 

 10,326 

 10,840 

 16,142 

8%

  • Rs 4,592 crore has been allocated to the Atal Krishi Jyoti Yojana.Rs 3,200 crore has been allocated to the Mukhya Mantri Kisan Kalyan Yojana.

Rural Development

 12,718 

 13,904 

 14,025 

 12,305 

-2%

  • Rs 2,925 crore has been allocated to the Pradhan Mantri Gram Sadak Yojana.
  • Rs 2,500 crore has been allocated to the Pradhan Mantri Awas Yojana (Grameen). 

Health and Family Welfare

 9,580 

 10,164 

 9,467 

 11,619 

10%

  • Rs 3,035 crore has been allocated to the National Health Mission. 
  • Rs 1,208 crore has been allocated for hospitals and dispensaries at district level. 

Social Welfare and Nutrition

 10,391 

 10,612 

 12,562 

 10,892 

2%

  • Rs 1,272 crore has been allocated towards the anganwadi scheme. 

Irrigation and Flood Control

 10,118 

 8,144 

 10,258 

 9,860 

-1%

  • Rs 1,996 crore has been allocated for the construction of canals, and Rs 1,885 crore has been allocated for the construction of dams.

Water Supply and Sanitation

 3,557 

 4,688 

 4,897 

 8,412 

54%

  • Rs 5,762 crore has been allocated towards the Jal Jeevan Mission. 

Police

 6,811 

 7,512 

 7,270 

 8,062 

9%

  • Rs 405 crore has been allocated towards the Mukhya Mantri Police Awas Yojana. 

Roads and Bridges

 7,304 

 6,303 

 6,187 

 6,957 

-2%

  • Rs 850 crore has been allocated for the repair and upgradation of roads. 
  • Rs 620 crore has been allocated for the construction of roads in rural areas.

% of total expenditure on all sectors

66%

63%

64%

64%

 

 

Sources: Madhya Pradesh Budget Documents 2021-22; PRS.

Committed expenditure: Committed expenditure of a state typically includes expenditure on payment of salaries, pensions, 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 2021-22, Madhya Pradesh is estimated to spend Rs 87,573 crore on committed expenditure, which is 53% of its revenue receipts.  This is an annual increase of 22% over 2019-20.  This comprises spending on salaries (30% of revenue receipts), pension (10%), and interest payments (13%).  In 2020-21, payment towards pension decreased by 13% while payment towards salaries increased by 10% from the budget to revised stage.

Table  4 : Committed expenditure in 2021-22 (in Rs crore)

Items

2019-20 Actuals

2020-21

BE

2020-21

RE

% change from BE 2020-21 to RE 2020-21

2021-22 

BE

Annualised Change (2019-20 to 2021-22 BE)

Salaries

32,878

38,112

42,098

10%

49,717

23%

Pensions

12,053

16,993

14,841

-13%

16,913

18%

Interest

14,217

16,460

16,459

0%

20,943

21%

Total Committed Expenditure

59,148

71,565

73,397

3%

87,573

22%

Sources: Madhya Pradesh Budget Documents 2021-22; PRS.

Receipts in 2021-22

  • Total revenue receipts for 2021-22 are estimated to be Rs 2,33,783 crore, an annual increase of 13% over 2019-20.  Of this, Rs 76,996 crore (47%) will be raised by the state through its own resources, and Rs 88,022 crore (53%) will come from the centre.  Resources from the centre will be in the form of state’s share in central taxes (32% of revenue receipts) and grants (22% of revenue receipts).  In 2021-22, the state has also estimated receipts of Rs 1,434 crore through disinvestment (i.e., sale of the government’s assets).
     
  • Devolution:  In 2021-22, receipts from the state’s share in central taxes (devolution) are estimated to register an annual increase of 3% over 2019-20.   However, as per the 2020-21 revised estimate, devolution receipts are estimated to decrease by 6% as compared to the budget estimate.  This is due to a 30% cut in the union budget for devolution to states, from Rs 7,84,181 crore to Rs 5,49,959 crore at the revised stage.
     
  • State’s own tax revenue:  Total own tax revenue of Madhya Pradesh is estimated to be Rs 65,254 crore in 2021-22, an annual increase of 8% over the state’s actual tax revenue in 2019-20.  In 2020-21, as per the revised estimate, state’s own tax revenue is estimated to be 9% higher than the budget estimate.  

Table  5 : Break up of state government receipts (in Rs crore)

Items

2019-20 Actuals

2020-21

BE

2020-21

RE

% change from BE 2020-21 to RE 2020-21

2021-22 

BE

Annualised Change (2019-20 to 2021-22 BE)

State's Own Tax

 55,933 

 49,126 

 53,472 

9%

 65,254 

8%

State's Own Non-Tax

 10,350 

 8,860 

 9,715 

10%

 11,742 

7%

Share in Central Taxes

 49,518 

 46,025 

 43,373 

-6%

 52,247 

3%

Grants-in-aid from Centre

 31,952 

 32,910 

 30,934 

-6%

 35,775 

6%

Total Revenue Receipts

1,47,753

1,36,921

1,37,494

0%

 1,65,018 

6%

Borrowings

 34,364 

 63,448 

 64,411 

2%

 67,258 

40%

Other receipts

 59 

 41 

 71 

73%

 1,507 

404%

Total Capital Receipts

 34,424 

 63,489 

 64,482 

2%

 68,765 

41%

Total Receipts

1,82,176 

2,00,410 

2,01,976 

1%

 2,33,783 

13%

Note: The budget documents have not taken the revenue under head 0028 (other taxes on income and expenditure) into account for calculating tax revenue, so necessary adjustments have been made to the figures for the analysis.

GST Compensation

The GST (Compensation to States) Act, 2017 guarantees states compensation for five years (till 2022) for any revenue loss arising due to GST implementation.     The Act guarantees states a 14% annual growth in their GST revenue, failing which compensation grants are provided to states to meet the shortfall.  These grants are funded through the GST compensation cess levied by the centre.  As the cess collection is not sufficient to meet the compensation requirement of states in 2020-21, a part of their requirement will be met through loans from the centre (which will be repaid using future cess collection).

As per the revised estimate of 2020-21, Madhya Pradesh is estimated to receive Rs 4,158 crore in the form of GST compensation grants which is 8% lower than the grants received in 2019-20 (Rs 4,531 crore).  In 2020-21, the state has estimated Rs 4,542 crore to come in the form of back-to-back loans from the Centre against GST compensation grants.     In 2021-22, Rs 5,322 crore is expected as GST compensation grants, which is an annual increase of 8% over the grants received in 2019-20.

Sources: Madhya Pradesh Budget Documents 2021-22; PRS.

  • In 2021-22, State’s GST revenue (SGST) is estimated to be Rs 23,000 crore, which is the largest source (35%) of the state’s own tax revenue.  This is an annual increase of 6% over the actual SGST revenue in 2019-20.   In 2020-21, SGST is estimated to be 9% more than the budget estimate.  
     
  • In 2021-22, Madhya Pradesh is expected to generate Rs 12,109 crore through the collection of state excise, an annual increase of 6% over 2019-20.  In 2020-21, the state excise collection is estimated to increase by 3% over the budget estimate.
     
  • In 2021-22, Rs 14,240 crore is estimated to be generated through Sales Tax and VAT, an annual increase of 12% over 2019-20.

Table  6 : Some of the major state’s own tax revenue sources (in Rs crore)

Head

2019-20 Actuals

2020-21

BE

2020-21

RE

% change from BE 2020-21 to RE 2020-21

2021-22 

BE

Annualised Change (2019-20 to 2021-22 BE)

% of Revenue Receipts in 2021-22

State's own tax revenue

 55,933 

49,126

53,472

9%

65,254

8%

40%

State GST (SGST)

 20,448 

 16,111 

 17,537 

9%

 23,000 

6%

14%

Sales Tax/VAT

     11,258 

     11,208 

     12,750 

14%

     14,240 

12%

9%

State Excise

     10,829 

       9,000 

       9,300 

3%

     12,109 

6%

7%

Stamps Duty and Registration Fees

       5,569 

       5,000 

       5,800 

16%

       6,495 

8%

4%

Taxes on Vehicles

       3,251 

       2,500 

       2,640 

6%

       3,600 

5%

2%

Taxes and Duties on Electricity

       2,268 

       3,000 

       3,150 

5%

       3,100 

17%

2%

GST Compensation Grants

 4,531 

 4,728 

 4,158 

-12%

 5,322 

8%

3%

Sources: Madhya Pradesh Budget Documents 2021-22; PRS.

Deficits, Debts and FRBM Targets for 2021-22

The Madhya Pradesh 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 deficit: It is the excess of revenue expenditure over revenue receipts.  A revenue deficit implies that the government needs to borrow to finance revenue expenditure (which do not increase its assets or reduces its liabilities).  The 2021-22 budget estimates a revenue deficit of Rs 7,953 crore (0.7% of the GSDP) in 2021-22.  The 15th Finance Commission has not recommended revenue deficit grants for Madhya Pradesh for 2021-26.

Fiscal Roadmap for 2021-26

The 15th Finance Commission recommended the following fiscal deficit targets for states for the 2021-26 period (as a % of GSDP): (i) 4% for 2021-22, (ii) 3.5% for 2022-23, and (iii) 3% for 2023-26.     The Commission estimates that total liabilities for Madhya Pradesh will increase from 31.3% of GSDP in 2020-21 to 33.7% of GSDP in 2025-26.

If a state is unable to fully utilise the sanctioned borrowing limit as specified above in any of the first four years (2021-25), it can avail the unutilised borrowing amount in subsequent years (within the 2021-26 period).  Additional borrowing worth 0.5% of GSDP will be allowed each year for the first four years (2021-25) upon undertaking certain power sector reforms including: (i) reduction in operational losses, (ii) reduction in revenue gap, (iii) reduction in payment of cash subsidy by adopting direct benefit transfer, and (iv) reduction in tariff subsidy as a percentage of revenue.  

Fiscal deficit:  It is the excess of total expenditure over total receipts.  This gap is filled by borrowings which leads to an increase in total liabilities.  In 2021-22, the fiscal deficit is estimated to be Rs 50,598 crore (4.47% of GSDP).  As per the revised estimate, in 2020-21, the fiscal deficit of the state is expected to be 5.66% of GSDP, which is higher than the budget estimate of 4.96%.  

Enhanced borrowing limit in 2020-21: Given the situation due to COVID-19, the central government permitted states to increase their fiscal deficit up to 5% of GSDP in 2020-21.  All states were allowed to increase their fiscal deficit up to 4% of GSDP.  The remaining 1% of GSDP is conditional on the implementation of reforms by states in the following areas (0.25% of GSDP for each reform): (i) one nation one ration card, (ii) ease of doing business, (iii) urban local body/ utility, and (iv) power distribution.  As of February, 2021, Madhya Pradesh is eligible to borrow Rs 8,542 crore for implementing the four reforms. 

Outstanding debt:  Outstanding debt is the accumulation of total borrowings at the end of a financial year.  In 2021-22, the outstanding debt is expected to be 28.5% of the GSDP, higher than the revised estimate for 2020-21 (28.8% of GSDP).  It is estimated to increase from 23.9% in 2018-19 to 28.5% in 2021-22.

Table  7 : Budget targets for deficits for Madhya Pradesh (% of GSDP)

Year

Revenue Balance

Fiscal Balance

Outstanding Debt

2018-19 (Actuals)

1.1%

-2.7%

23.9%

2019-20 (Actuals)

-0.3%

-3.5%

24.3%

2020-21 (Revised)

-2.3%

-5.7%

28.8%

2021-22 (Budget)

-0.7%

-4.5%

28.5%

2022-23

>0

4%

31.7%

2023-24

>0

4%

31.8%

2024-25

>0

3%

31.4%

Note: Outstanding debt includes outstanding debt under Internal Debt, Loans and Advances from Centre, Small Savings, Provident Fund, and Insurance and Pension Fund.  Negative values indicate deficit and positive values indicate surplus.

Sources: Madhya Pradesh Budget Documents 2021-22; PRS.

Figure  2 : Revenue and Fiscal Balance (% of GSDP) 

image

Note: Negative values indicate deficit and positive values indicate surplus; RE is Revised Estimates; BE is Budget estimates.

Sources: Madhya Pradesh Budget Documents 2021-22; PRS.  

Figure  3 : Outstanding debt targets (as % of GSDP)

image

Note: RE is Revised Estimates; BE is budget estimates.

Sources: Madhya Pradesh Budget Documents 2021-22; PRS.  

Annexure 1:  Comparison of states’ expenditure on key sectors

[1] The graphs below compare Madhya Pradesh’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 Madhya Pradesh) as per their budget estimates of 2020-21.

  • Education:  Madhya Pradesh has allocated 17% of its total expenditure for education in 2021-22.  This is higher than the average allocation (15.8%) for education by all states (2020-21 BE).
     
  • Health:  Madhya Pradesh has allocated 5.4% of its total expenditure on health, which is similar to the average allocation for health by states (5.5%).
     
  • Agriculture:  The state has allocated 7.6% of its total expenditure towards agriculture and allied activities.  This is higher than the average allocation for agriculture by states (6.3%).
     
  • Rural development:  Madhya Pradesh has allocated 5.8% of its expenditure on rural development.   This is marginally lower than the average allocation for rural development by states (6.1%).
     
  • Police:  Madhya Pradesh has allocated 3.8% of its total expenditure on police, which is lower than the average expenditure on police by states (4.3%).
     
  • Roads and bridges:  Madhya Pradesh has allocated 3.3% of its total expenditure on roads and bridges, which is lower than the average allocation by states (4.3%).

   

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Note: 2019-20, 2020-21 (BE), 2020-21 (RE), and 2021-22 (BE) figures are for Madhya Pradesh.

Sources: Madhya Pradesh Budget Documents 2021-22; PRS; various state budgets; PRS.

Annexure 2:  Recommendations of the 15th Finance Commission for 2021-26

The 15th Finance Commission’s (FC) report for the 2021-26 period was released on February 1, 2021.  For the 2021-26 period, the Commission has recommended the share of states in the divisible pool of central taxes to be 41%, same as that for 2020-21 (also recommended by the 15th FC in its report for 2020-21).  This is 1% point lower than the 42% share recommended by the 14th FC (for the 2015-20 period) to separately provide funds for the newly formed union territories of Jammu and Kashmir, and Ladakh.  The 15th FC proposed revised criteria for determining the share of individual states (different from 14th FC).  Based on the 15th FC’s recommendations for the period 2021-26, Madhya Pradesh will have a 3.22% share in the divisible pool of central taxes.   This implies that out of every Rs 100 of revenue in the divisible pool during the 2021-26 period, Madhya Pradesh will receive Rs 3.22.  This is higher than the 3.17% share recommended by the 14th FC for the state for 2015-20.

Table  8 :  Share of states in the divisible pool of central taxes under the 14th and 15th FC periods 

State

14th FC

15th FC

15th FC

% change

2015-20

2020-21

2021-26

2015-20
 to 2021-26

2020-21
 to 2021-26

Andhra Pradesh

1.81

1.69

1.66

-8.2%

-1.6%

Arunachal Pradesh

0.58

0.72

0.72

25.2%

-0.2%

Assam

1.39

1.28

1.28

-7.8%

-0.1%

Bihar

4.06

4.13

4.12

1.6%

0.0%

Chhattisgarh

1.29

1.40

1.40

8.0%

-0.3%

Goa

0.16

0.16

0.16

-0.3%

0.0%

Gujarat

1.30

1.39

1.43

10.1%

2.4%

Haryana

0.46

0.44

0.45

-1.6%

1.0%

Himachal Pradesh

0.30

0.33

0.34

13.6%

3.9%

Jammu & Kashmir

0.78

-

-

-

-

Jharkhand

1.32

1.36

1.36

2.8%

-0.2%

Karnataka

1.98

1.50

1.50

-24.5%

0.0%

Kerala

1.05

0.80

0.79

-24.8%

-0.9%

Madhya Pradesh

3.17

3.23

3.22

1.5%

-0.5%

Maharashtra

2.32

2.52

2.59

11.7%

3.0%

Manipur

0.26

0.29

0.29

13.3%

-0.3%

Meghalaya

0.27

0.31

0.31

16.6%

0.3%

Mizoram

0.19

0.21

0.21

6.1%

-1.2%

Nagaland

0.21

0.24

0.23

11.5%

-0.7%

Odisha

1.95

1.90

1.86

-4.8%

-2.2%

Punjab

0.66

0.73

0.74

11.9%

1.1%

Rajasthan

2.31

2.45

2.47

7.1%

0.8%

Sikkim

0.15

0.16

0.16

3.2%

0.0%

Tamil Nadu

1.69

1.72

1.67

-1.0%

-2.6%

Telangana

1.02

0.88

0.86

-15.8%

-1.5%

Tripura

0.27

0.29

0.29

7.7%

-0.1%

Uttar Pradesh

7.54

7.35

7.36

-2.5%

0.0%

Uttarakhand

0.44

0.45

0.46

3.7%

1.3%

West Bengal

3.08

3.08

3.08

0.3%

0.1%

Total

42.00

41.00

41.00

Note: Although the 15th Finance Commission recommended the same criteria for 2020-21 and 2021-26 periods, the reference period for computation on some underlying indicators are different. This is why the share in the divisible pool in 2020-21 and 2021-26 differ for states. State’s share has been rounded off to two decimal places.
Sources: Reports of 14th and 15th FCs; Union Budget Documents 2021-22; PRS.

The 15th FC recommended grants worth Rs 10.3 lakh crore for states over five years (2021-26).  A portion of these grants will be conditional.  17 states will receive revenue deficit grants during this period.     Sector-specific grants include grants for sectors such as health, agriculture, and education.  Grants to local governments include: (i) Rs 1.2 lakh crore for urban local bodies, (ii) Rs 2.4 lakh crore for rural local bodies, and (iii) health grants worth Rs 70,000 crore through local bodies for healthcare infrastructure. 

 

Grants recommended for Madhya Pradesh include:

Table  9 : Grants recommended for 2021-26 (Rs crore)

Grants

Total

Madhya Pradesh

Revenue deficit grants

 2,94,514

0

Local governments grants

 4,36,361

28,367*

Sector-specific grants

 1,29,987

10,177#

Disaster management grants

 1,22,601

10,059

State-specific grants

49,599

1,765

Total

10,33,062

50,368

Note:  This does not include competition-based grants including *grants for incubation of new cities (part of local bodies grants), and #grants for school education, and aspirational districts and blocks.
Source: Report of 15th FC; PRS.

(i) Rs 28,367 crore as grants for local bodies, (ii) Rs 10,177 crore as sector-specific grants in areas such as health, and agriculture, (iii) Rs 10,059 crore towards disaster management grants, and (iv) Rs 1,765 crore as state-specific grants.

Table  10 : Taxes devolved to states as per Union Budget 2021-22

State

2019-20

2020-21
 Revised

2021-22
 Budget

Andhra Pradesh

29,421

22,611

26,935

Arunachal Pradesh

9,363

9,681

11,694

Assam

22,627

17,220

20,819

Bihar

66,049

55,334

66,942

Chhattisgarh

21,049

18,799

22,676

Goa

2,583

2,123

2,569

Gujarat

21,077

18,689

23,148

Haryana

7,408

5,951

7,275

Himachal Pradesh

4,873

4,394

5,524

Jammu & Kashmir

12,623

-38

-

Jharkhand

21,452

18,221

22,010

Karnataka

32,209

20,053

24,273

Kerala

17,084

10,686

12,812

Madhya Pradesh

51,584

43,373

52,247

Maharashtra

37,732

33,743

42,044

Manipur

4,216

3,949

4,765

Meghalaya

4,387

4,207

5,105

Mizoram

3,144

2,783

3,328

Nagaland

3,403

3,151

3,787

Odisha

31,724

25,460

30,137

Punjab

10,777

9,834

12,027

Rajasthan

37,554

32,885

40,107

Sikkim

2,508

2,134

2,582

Tamil Nadu

27,493

23,039

27,148

Telangana

16,655

11,732

13,990

Tripura

4,387

3,899

4,712

Uttar Pradesh

1,22,729

98,618

1,19,395

Uttarakhand

7,189

6,072

7,441

West Bengal

50,051

41,353

50,070

Total

6,83,353

5,49,959

6,65,563

Note: Actuals for 2019-20 and Revised Estimates for 2020-21 have been reported in the Union Budget after adjusting for excess or less devolution in previous years.  
 Sources: Union Budget Documents 2021-22; PRS.

Annexure 3:  Comparison of 2020-21 Revised and 2021-22 Budget Estimates

The following tables compare the budget estimates for 2021-22 with the revised estimates for 2020-21.

Table  11 : Comparison of Budget Estimates for 2021-22 with Revised Estimates for 2020-21

Particular

2020-21 RE

2021-22 BE

% change from 2020-21 RE to 2021-22 BE

Receipts (1+2)

2,01,976 

2,33,783 

16%

Receipts except Borrowings

1,37,566 

1,66,525 

21%

1. Revenue Receipts (a+b+c+d)

1,37,494 

1,65,017 

20%

a. Own Tax Revenue

53,472 

65,254 

22%

b. Own Non-Tax Revenue

9,715 

11,742 

21%

c. Share in central taxes

43,373 

52,247 

20%

d. Grants-in-aid from the Centre

30,934 

35,775 

16%

Of which GST compensation

4,158 

5,322 

-2%

2. Capital Receipts

64,482 

68,765 

7%

a. Borrowings

64,411 

67,258 

4%

Of which GST compensation loan

4,542 

 - 

-

Expenditure (3+4)

2,01,631 

2,34,918 

17%

3. Revenue Expenditure

1,58,545 

1,72,971 

9%

4. Capital Expenditure

43,085 

61,947 

44%

i. Capital Outlay

29,671 

40,667 

37%

ii. Debt Repayment

12,124 

17,794 

47%

Revenue Balance

21,051 

7,953 

-62%

Revenue Balance (as % of GSDP)

2.29%

0.7%

0%

Fiscal Balance

51,941 

50,598 

-3%

Fiscal Balance (as % of GSDP)

5.66%

4.47%

0%

Note:  Negative value of balance indicates a deficit and positive value indicates a surplus.

Sources: Madhya Pradesh Budget Documents 2021-22; PRS.

Table  12 : Key Components of State’s Own Tax Revenue 

Tax

2020-21 RE

2021-22 BE

% change from 2020-21 RE to 2021-22 BE

SGST

 17,537 

 23,000 

31%

Sales Tax/VAT

 12,750 

 14,240 

12%

State Excise Duty

 9,300 

 12,109 

30%

Stamps Duty and Registration Fees

 5,800 

 6,495 

12%

Taxes on Vehicles

 2,640 

 3,600 

36%

Taxes and Duties on Electricity

 3,150 

 3,100 

-2%

Land Revenue

 400 

 850 

113%

Sources: Madhya Pradesh Budget Documents 2021-22; PRS.

Table  13 : Allocation towards Key Sectors 

Sector

2020-21 RE

2021-22 BE

% change from 2020-21 RE to 2021-22 BE

Education, Sports, Arts, and Culture

32,010

36,344

14%

Energy

12,286

16,745

36%

Agriculture and allied activities

10,840

16,142

49%

Rural Development

14,025

12,305

-12%

Health and Family Welfare

9,467

11,619

23%

Social Welfare and Nutrition

12,562

10,892

-13%

Irrigation and Flood Control

10,258

9,860

-4%

Water Supply and Sanitation

4,897

8,412

72%

Police

7,270

8,062

11%

Transport

6,267

6,978

11%

Sources: Madhya Pradesh Budget Documents 2021-22; PRS.

[1]  The 30 states include the Union Territory of Delhi and Union Territory of Jammu and Kashmir.

 

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