Maharashtra Budget Analysis
2019-2020
The Finance Minister, Mr. Sudhir Mungantiwar, presented the additional budget for Maharashtra for financial year 2019-20 on June 18, 2019. The Minister had previously presented the interim budget for the state in February 2019.
Budget Highlights
- The Gross State Domestic Product (GSDP) of Maharashtra for 2019-20 (at current prices) is estimated to be Rs 29,79,556 crore. This is 12% higher than the revised estimate for 2018-19.
- Total expenditure for 2019-20 is estimated to be Rs 4,04,794 crore, an 8.5% increase over the revised estimate of 2018-19. In 2018-19, as per the revised figures, there is estimated to be an increase of Rs 5,954 crore (1.6%) of expenditure over the budgeted estimate.
- Total receipts (excluding borrowings) for 2019-20 are estimated to be Rs 3,16,930 crore, an increase of 9.8% as compared to the revised estimate of 2018-19. In 2018-19, total receipts (excluding borrowings) are estimated to be higher than the budgeted estimate by Rs 512 crore.
- Revenue deficit for 2019-20 is targeted at Rs 20,293 crore, or 0.68% of the Gross State Domestic Product (GSDP). Fiscal deficit is targeted at Rs 61,670 crore (2.07% of GSDP).
- Sectors such as rural development (62%), water supply, sanitation, housing and urban development (26%), and education (25%) saw the highest increase in allocations. On the other hand, social welfare and nutrition (33%) and agriculture (25%) saw the highest decrease in allocations.
Policy Highlights
- Chief Minister Employment Generation Programme: The New Industrial Policy of Maharashtra aims to generate 60 lakh new employment in the state. For this, a new scheme called Chief Minister Employment Generation Programme has been launched. The scheme aims at establishing 10,000 new small industries.
- Infrastructure facilities: An amount of Rs 55,335 crore is expected to be spent on constructing the Nagpur-Mumbai express highway. Further, Rs 11,332 crore is allocated for the development of the Bandra-Versova Sea Link. The government aims to construct 3,36,994 km. length roads till 2021.
- Artificial rain: To overcome drought in the state, an approval has been given for artificial rain experiment by aerial cloud seeding. This has been done to increase rainfall using modern technology.
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Maharashtra’s Economy · GSDP: The growth rate of Maharashtra’s GSDP (at current prices) has marginally decreased from 10.5% in 2015-16 to 10.2% in 2017-18. · Sectors: In 2017-18, the sectors of agriculture, manufacturing, and services contributed to 15%, 28%, and 58% of the Gross State Value Added respectively. Between 2016-17 and 2017-18, these sectors grew by 2.5%, 11.2%, and 12.6%, respectively. · Per capita GSDP of Maharashtra: The per capita GSDP of Maharashtra in 2017-18 (at current prices) was Rs 1,98,510. This is 9% higher than that in 2016-17. · Unemployment: According to the Periodic Labour Force Survey (2017-18), Maharashtra’s rate of unemployment is at 4.9%, as compared to the all-India level of 6.1%. |
Figure 1: Growth in GSDP and sectors in Maharashtra (year-on-year)
Note: As per CSO, agriculture here includes mining and quarrying. Sources: Economic Survey of Maharashtra 2018-19; PRS. |
Budget Estimates for 2019-20
- The total expenditure in 2019-20 is targeted at Rs 4,04,794 crore. This is 8.5% higher than the revised estimate of 2018-19. This expenditure is proposed to be met through receipts (other than borrowings) of Rs 3,16,930 crore and borrowings of Rs 77,196 crore. In 2019-20, receipts (other than borrowings) are expected to be 9.8% 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 |
2,86,769 |
3,67,281 |
3,73,235 |
1.6% |
4,04,794 |
8.5% |
|
A. Receipts (except borrowings) |
2,45,432 |
2,88,234 |
2,88,746 |
0.2% |
3,16,930 |
9.8% |
|
B. Borrowings |
49,670 |
74,105 |
34,063 |
-54.0% |
77,196 |
126.6% |
|
Total Receipts (A+B) |
2,95,101 |
3,62,338 |
3,22,808 |
-10.9% |
3,94,126 |
22.1% |
|
Revenue Deficit (-)/ Surplus (+) |
2,082 |
-15,375 |
-14,960 |
-2.7% |
-20,293 |
35.6% |
|
As % of GSDP |
0.09% |
-0.55% |
-0.56% |
|
-0.68% |
|
|
Fiscal Deficit (-)/ Surplus (+) |
-23,961 |
-50,586 |
-56,053 |
10.8% |
-61,670 |
10.0% |
|
As % of GSDP |
-0.99% |
-1.81% |
-2.11% |
|
-2.07% |
|
|
Primary Deficit (-)/ Surplus (+) |
9,057 |
-16,201 |
-22,124 |
36.6% |
-26,463 |
19.6% |
|
As % of GSDP |
0.38% |
-0.58% |
-0.83% |
|
-0.89% |
|
Notes: BE is Budget Estimate; RE is Revised Estimate.
Sources: Budget in Brief, Maharashtra Budget Documents 2019-20, June 2019; PRS.
Expenditure in 2019-20
- Capital expenditure for 2019-20 is proposed to be Rs 69,861 crore, which is a decrease of 2.7% 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.
- Maharashtra’s capital outlay for 2019-20 is estimated to be Rs 41,659 crore, which is 0.2% higher than the revised estimate of 2018-19. The capital outlay towards rural development is estimated to increase by Rs 6,351 crore from the revised estimates of 2018-19.
- Revenue expenditure for 2019-20 is proposed to be Rs 3,34,933 crore, which is an increase of 11.1% over the revised estimate of 2018-19. This expenditure includes payment of salaries, pensions, and interest, among others. Revenue expenditure accounts for 83% 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 |
45,198 |
65,938 |
71,775 |
8.9% |
69,861 |
-2.7% |
|
of which Capital Outlay |
26,842 |
36,298 |
41,573 |
14.5% |
41,659 |
0.2% |
|
Revenue Expenditure |
2,41,571 |
3,01,343 |
3,01,460 |
0.0% |
3,34,933 |
11.1% |
|
Total Expenditure |
2,86,769 |
3,67,281 |
3,73,235 |
1.6% |
4,04,794 |
8.5% |
|
A. Debt Repayment |
17,376 |
28,462 |
28,436 |
-0.1% |
26,195 |
-7.9% |
|
B. Interest Payments |
33,018 |
34,385 |
33,929 |
-1.3% |
35,207 |
3.8% |
|
Debt Servicing (A+B) |
50,394 |
62,847 |
62,365 |
-0.8% |
61,402 |
-1.5% |
Note: Capital outlay denotes expenditure which leads to creation of assets.
Sources: Maharashtra Budget in Brief 2019-20 (June 2019); PRS.
Sector expenditure in 2019-20
The sectors listed below account for 60% of the total budgeted expenditure of Maharashtra in 2019-20. A comparison of Maharashtra’s expenditure on key sectors with that by other states can be found in the Annexure.
Table 3: Sector-wise expenditure for Maharashtra 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 |
48,583 |
59,393 |
56,854 |
71,307 |
25% |
· Rs 7,219 crore has been allocated to local bodies for government primary schools. · Rs 23,147 crore has been allocated to non-government secondary schools. · Rs 583 crore has been allocated for the Samagra Shikha. |
|
Water Supply, Sanitation, Housing and Urban Development |
13,148 |
21,835 |
23,776 |
30,077 |
26% |
· Rs 620 crore has been allocated for Swachh Bharat Mission. · Rs 706 crore allocated for providing housing for all under Pradhan Mantri Awas Yojana. · Rs 442 crore and Rs 600 crore has been allocated towards SMART City and AMRUT scheme respectively. |
|
Rural Development |
7,846 |
16,682 |
14,865 |
24,039 |
62% |
· Rs 1,513 crore will be spent on rural employment. · Rs 3,3,87 crore will be spent on construction of roads and bridges. |
|
Agriculture and allied activities |
31,503 |
29,683 |
30,590 |
22,793 |
-25% |
· An amount of Rs 2,094 crore has been allocated for crop insurance. |
|
Welfare of SC/ ST/OBC and Minorities |
13,014 |
19,059 |
16,411 |
18,960 |
16% |
§ Rs 3,196 crore has been allocated for education of SCs and backward classes. |
|
Transport |
12,100 |
15,040 |
17,319 |
17,803 |
3% |
· As per the budget speech, Rs 11,332 crore has been allocated for the development of the Bandra-Versova Sea Link. |
|
Police |
11,399 |
13,866 |
14,003 |
17,234 |
23% |
· Rs 10,990 crore has been allocated towards district police · For modernisation of police forces, Rs 190 crore has been allocated. |
|
Health and Family Welfare |
12,175 |
13,450 |
16,127 |
15,919 |
-1% |
· Rs 120 crore has been allocated for Pradhan Mantri Jan Arogaya Yojana. · Rs 767 crore has been allocated for National Health Mission. |
|
Social Welfare and Nutrition |
7,336 |
12,258 |
20,042 |
13,406 |
-33% |
· An amount of Rs 1,449 crore has been allocated for welfare of aged and destitute |
|
Irrigation and Flood Control |
11,528 |
11,387 |
14,374 |
12,363 |
-14% |
· Rs 10,594 crore has been allocated for major and medium irrigation projects. |
|
% of total expenditure |
59% |
58% |
60% |
60% |
|
|
Note: The figures have been arrived to by adding numbers from the Annual Financial Statement presented in February 2019, and the Additional Civil Budget Estimated for 2019-20, presented in June 2019.
Source: Maharashtra Budget Speech 2019-20. June 2019; Maharashtra Annual Financial Statement 2019-20, February 2019; Maharashtra Demand for Grants 2019-20, February 2019; Additional Civil Budget Estimated for 2019-20; 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, Maharashtra has budgeted to spend Rs 1,86,816 crore on the payment of salaries, interest, and pensions. This is an increase of 24% over the revised estimates of 2018-19. Note that committed liabilities account for 46% 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 |
75,088 |
1,02,668 |
88,630 |
-14% |
1,15,241 |
30% |
|
Pensions |
23,853 |
27,378 |
27,567 |
1% |
36,368 |
32% |
|
Interest payments |
33,018 |
34,385 |
33,929 |
-1% |
35,207 |
4% |
|
Total Committed Liabilities |
1,31,959 |
1,64,431 |
1,50,126 |
-9% |
1,86,816 |
24% |
Note: BE is Budget Estimate; RE is Revised Estimate.; Sources: Budget in Brief, June 2019; Maharashtra Budget Documents 2019-20; PRS.
Receipts in 2019-20
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In 2019-20, Maharashtra is expected to borrow Rs 77,196 crore to meet its expenditure requirements, which is 127% higher than the revised estimates of 2018-19. In 2018-19, the borrowings of the state were 54% lower than the amount budgeted. |
- The total revenue receipts for 2019-20 are estimated to be Rs 3,14,640 crore, an increase of 9.8% over the revised estimate of 2018-19. Of this, Rs 2,27,631 crore (72% of the revenue receipts) will be raised by the state through its own resources, and Rs 87,009 crore (28% 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: Maharashtra is estimated to generate Rs 16,807 crore through non-tax sources in 2019-20. Of this, Rs 3,570 crore will received by the state from non-ferrous mining and metallurgical industries. In addition, Rs 3,535 crore will be received from urban development sector.
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 |
1,67,948 |
1,88,040 |
1,88,931 |
0.5% |
2,10,824 |
11.6% |
|
State's Own Non-Tax |
16,680 |
22,785 |
17,050 |
-25.2% |
16,807 |
-1.4% |
|
Share in Central Taxes |
37,203 |
43,515 |
42,050 |
-3.4% |
46,631 |
10.9% |
|
Grants-in-aid from Centre |
21,823 |
31,629 |
38,468 |
21.6% |
40,378 |
5.0% |
|
Total Revenue Receipts |
2,43,654 |
2,85,968 |
2,86,500 |
0.2% |
3,14,640 |
9.8% |
|
Borrowings |
49,670 |
74,105 |
34,063 |
-54.0% |
77,196 |
126.6% |
|
Other receipts |
1,778 |
2,266 |
2,246 |
-0.9% |
2,290 |
2.0% |
|
Total Capital Receipts |
51,448 |
76,370 |
36,309 |
-52.5% |
79,486 |
118.9% |
|
Total Receipts |
2,95,101 |
3,62,338 |
3,22,808 |
-10.9% |
3,94,126 |
22.1% |
Sources: Maharashtra Budget Documents 2019-20; PRS.
- Tax Revenue: Total own tax revenue of Maharashtra is estimated to be Rs 2,10,824 crore in 2019-20. The composition of the state’s tax revenue is shown in Figure 2.
- The own tax to GSDP ratio is targeted at 7.1% in 2019-20, which is the same as the revised estimates of 2018-19. This implies that growth in collection of taxes has been at par with the growth in the economy.
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Figure 2: Composition of the state’s tax revenue in 2019-20 (Budget Estimates)
Sources: Maharashtra Budget in Brief 2019-20; PRS. |
· State Goods and Services Tax (SGST) is the largest component of tax revenue of the state. It is expected to generate Rs 1,02,760 crore in 2019-20. This is an increase of 14% from the revised estimate of 2018-19. · In 2019-20, Maharashtra is expected to generate Rs 37,066 crore through the levy of sales tax (on items such as petroleum products). This is an increase of 13.9% over the revised estimate of 2018-19. · Further, in 2019-20, the state is expected to generate Rs 27,000 crore from stamp duty and registration fees. This is an increase of 8% over the revised estimate of 2018-19. · In addition, in 2019-20, the state is expected to generate Rs 17,477 crore from the levy of excise duty, and Rs 9,570 crore from taxes and duties on electricity. |
Deficits, Debts and FRBM Targets for 2019-20
The Maharashtra 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: 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 deficit of Rs 20,293 crore (or 0.7% of GSDP) in 2019-20. This is 35.6% higher
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Debt Servicing In 2019-20, Maharashtra is expected to spend Rs 61,402 crore on servicing its debt, which is 15% of its estimated expenditure. This expenditure includes Rs 26,195 crore towards repayment of loans, and Rs 35,207 crore towards interest payments. In 2019-20, the expenditure on repayment of loans is expected to decrease by 8% over the revised estimate of 2018-19. |
than the revised estimates of 2018-19. This implies that revenue receipts are expected to be lower than the revenue expenditure, resulting in a deficit. The 14th Finance Commission had recommended that states should eliminate revenue deficits. The 2019-20 estimates for Maharashtra suggest that the state will not be able to meet this target of eliminating revenue deficit. Note that, Maharashtra had a revenue surplus at 0.1% in 2017-18.
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, Maharashtra’s fiscal deficit is estimated to be Rs 61,670 crore, which is 2.1% of the GSDP. The estimate is lower than the 3% limit prescribed by the 14th Finance Commission. Note that, fiscal deficit increased significantly from Rs 23,961 crore (1% of GSDP) in 2017-18 to Rs 56,053 (2.1% of GSDP) in 2018-19.
Outstanding Liabilities: This is the accumulation of borrowings taken by the state government over the years. In 2019-20, Maharashtra’s outstanding liabilities are expected to be at 15.8% of the GSDP.
Table 6: Budget targets for deficits for Maharashtra in 2019-20 (% of GSDP)
|
Year |
Revenue |
Fiscal |
Outstanding Liabilities |
|
Deficit (-)/Surplus (+) |
Deficit (-)/Surplus (+) |
||
|
2017-18 |
0.1% |
-1.0% |
16.7% |
|
2018-19 (RE) |
-0.6% |
-2.1% |
15.6% |
|
2019-20 (BE) |
-0.7% |
-2.1% |
15.8% |
|
2020-21 |
-0.3% |
-1.9% |
16.6% |
|
2021-22 |
-0.4% |
-1.8% |
16.6% |
Sources: Medium Term Fiscal Policy; Maharashtra Budget Documents, June 2019; PRS.
Figures 3 and 4 show the trend in deficits and outstanding liabilities targets from 2017-18 to 2021-22.
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Figure 3: Revenue and Fiscal Deficit (as % of GSDP)
Sources: Maharashtra Budget Documents; PRS. |
Figure 4: Outstanding liabilities targets (as % of GSDP)
Sources: Maharashtra Budget Documents; PRS. |
Annexure
The graphs below compare Maharashtra’s expenditure on six key sectors as a proportion of its total budget, with 26 other states.[1]
- Education: Maharashtra has allocated 18.9% of its expenditure on education in 2019-20. This is higher than the average expenditure allocated to education by other states (using 2018-19 BE). (15.9%)
- Health: Maharashtra has allocated 4.2% of its expenditure on health, which is lower than the average expenditure of other states (5.2%)
- Agriculture and allied activities: The state has allocated 6.1% of its total budget towards agriculture and allied activities. This is lower than the allocations of other states (6.4%).
- Rural development: Maharashtra has allocated 6.4% of its expenditure on rural development. This is higher than the average (6.1%) of the other states.
- Police: Maharashtra has allocated 4.6% of its total expenditure on police, which is marginally higher than the average expenditure of other states (3.9%).
- Welfare of SC, ST and OBC: Maharashtra has allocated 5% of its total expenditure on the welfare of SC, ST and OBC, which is higher than the average expenditure of other states (3.1%).
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Note: 2017-18, 2018-19 (BE), 2018-19 (RE), and 2019-20 (BE) figures are for Maharashtra.
Source: Annual Financial Statement of Maharashtra 2019-20, February 2019; Additional Civil Budget Estimated for 2019-20; 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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