The Deputy Chief Minister of Maharashtra, Mr. Ajit Pawar, presented the Budget for the state for the financial year 2022-23 on March 11, 2022.

Budget Highlights

  • The Gross State Domestic Product (GSDP) of Maharashtra for 2022-23 (at current prices) is projected to be Rs 35.81 lakh crore.  This is a growth of 12% over the revised estimate of GSDP for 2021-22 (Rs 31.97 lakh crore).   In 2021-22, GSDP is estimated to grow by 18% over the previous year (at current prices).
  • Expenditure (excluding debt repayment) in 2022-23 is estimated to be Rs 4,95,405 crore, a 9% increase over the revised estimates of 2021-22 (Rs 4,53,547 crore).   In addition, debt of Rs 53,003 crore will be repaid by the state in 2022-23.  In 2021-22, expenditure (excluding debt repayment) is estimated to be 4% higher than the budget estimate.
  • Receipts (excluding borrowings) for 2022-23 are estimated to be Rs 4,05,806 crore, an increase of 11% over the revised estimates of 2021-22 (Rs 3,64,465 crore).  In 2021-22, receipts (excluding borrowings) are estimated to fall short of the budget estimate by Rs 6,854 crore (a decrease of 2%).
  • Fiscal deficit for 2022-23 is targeted at Rs 89,598 crore (2.50% of GSDP).   In 2021-22, as per the revised estimates, fiscal deficit is expected to be 2.79% of GSDP, higher than the budget estimate of 2.24% of GSDP.
  • Revenue deficit in 2022-23 is estimated to be Rs 24,353 crore, which is 0.68% of the GSDP.  In 2021-22, Maharashtra is estimated to observe a revenue deficit of 0.96% of GSDP, higher than the budget estimate of 0.34% of GSDP.

Policy Highlights

  • Tax proposals: VAT on CNG will be reduced from 13.5% to 3%.  Amnesty schemes for GST and Stamp Duty will be launched. Concession in stamp duty will continue for two more years.
  • Special program for accelerating economic growth: A special program for accelerating economic growth of the state called “Panchsutri of Development” will be launched.  Under this program, about four lakh crore rupees will be spent over next three years in five sectors – (i) agriculture, (ii) health, (iii) human resource, (iv) transport, and (v) industry.  
  • Agriculture: An incentive grant of Rs. 50,000 will be provided to about 20 lakh farmers who repay their loans regularly (also announced in 2020-21 but was not made operational).  Loan given by Land Development Bank worth Rs 964 crore to farmers will be waived off.

Maharashtra’s Economy

  • GSDP:  Maharashtra’s GSDP (at constant prices) contracted by 7.6% in 2020-21.  In comparison, national GDP registered a negative growth of 6.6% in 2020-21.  In case of Maharashtra, manufacturing as well as services sectors registered a contraction in 2020-21.
     
  • Sectors:  In 2020-21, at current prices, agriculture, manufacturing, and services sectors contributed to 16%, 24%, and 60% of the economy.
     
  • Per capita GSDP:  The per capita GSDP of Maharashtra in 2020-21 (at current prices) was Rs 2,18,753; 1.7% lower than the corresponding figure in 2019-20.     In comparison, per capita GDP at the national level was Rs 1,46,087 in 2020-21 (at current prices).

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

 image 

Note: These numbers are as per constant (2011-12) prices which implies that the growth rate is adjusted for inflation.
Sources: Maharashtra Economic Survey 2021-22; PRS.

Budget Estimates for 2022-23

  • Expenditure (excluding debt repayment) in 2022-23 is targeted at Rs 4,95,405 crore.  This is an increase of 9% over the revised estimate of 2021-22 (Rs 4,53,547 crore).   This expenditure is proposed to be met through receipts (excluding borrowings) of Rs 4,05,806 crore and net borrowings of Rs 74,935 crore.  Receipts (excluding borrowings) for 2022-23 are expected to register an increase of 11% over the revised estimate of 2021-22.  In 2021-22, receipts are estimated to be 2% lower than the budget estimates.
  • In 2022-23, the state is estimated to observe a revenue deficit of Rs 24,353 crore, which is 0.68% of its GSDP.  In comparison, in 2020-21, the state observed a revenue deficit of 1.52% of GSDP (Rs 41,142 crore).  In 2021-22, the state is estimated to observe a revenue deficit of 0.96% of GSDP (Rs 30,724 crore), higher than the budget estimate of 0.34% of GSDP.
  • Fiscal deficit in 2022-23 is estimated to be 2.50% of GSDP which is within the limit of 4% of GSDP permitted by the central government in Union Budget 2022-23 (of which, 0.5% of GSDP will be made available upon undertaking power sector reforms).  In 2021-22, the state has estimated a fiscal deficit of 2.79% of GSDP, within the limit of 4.5% of GSDP permitted by the central government (of which, 0.5% of GSDP becomes available upon undertaking power sector reforms).  

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

Items

2020-21

Actuals

2021-22

BE

2021-22

RE

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

2022-23

BE

% change from RE 21-22 to BE 22-23

Total Expenditure

4,00,225

4,84,091

4,96,638

3%

5,48,408

10%

(-) Repayment of debt

57,587

46,131

43,091

-7%

53,003

23%

Net Expenditure (E)

3,42,638

4,37,960

4,53,547

4%

4,95,405

9%

Total Receipts

3,89,596

4,93,885

4,68,810

-5%

5,33,745

14%

(-) Borrowings

1,18,516

1,22,566

1,04,345

-15%

1,27,938

23%

Net Receipts (R)

2,71,080

3,71,319

3,64,465

-2%

4,05,806

11%

Fiscal Deficit (E-R)

71,558

66,641

89,082

34%

89,598

1%

as % of GSDP

2.64%

2.24%

2.79%

2.50%

Revenue Deficit

41,142

10,225

30,724

200%

24,353

-21%

as % of GSDP

1.52%

0.34%

0.96%

0.68%

Primary Deficit

34,588

23,643

47,795

102%

42,835

-10%

as % of GSDP

1.28%

0.79%

1.49%

1.20%

Sources: Maharashtra Budget Documents 2022-23; Maharashtra Economic Survey 2021-22; PRS.

Expenditure in 2022-23

  • Revenue expenditure in 2022-23 is estimated to be Rs 4,27,780 crore, which is an increase of 9% over the revised estimate of 2021-22 (Rs 3,92,857 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 4% higher than the budget estimate.
  • Capital outlay in 2022-23 is estimated to be Rs 65,210 crore, which is an increase of 13% over the revised estimate of 2021-22.  Capital outlay comprises expenditure towards the creation of assets. This includes expenditure on building schools, hospitals, and roads and bridges.  In 2021-22, capital outlay is estimated to be 4% higher than the budget estimate.

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

Items

2020-21

Actuals

2021-22

BE

2021-22

RE

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

2022-23

BE

% change from RE 21-22 to BE 22-23

Revenue Expenditure

3,10,610

3,79,212

3,92,857

4%

4,27,780

9%

Capital Outlay

29,687

55,613

57,761

4%

65,210

13%

Loans given by the state

2,342

3,135

2,928

-7%

2,414

-18%

Net Expenditure

3,42,638

4,37,960

4,53,547

4%

4,95,405

9%

Sources: Maharashtra 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 budget for committed expenditure items limits the state’s flexibility to decide on other expenditure priorities such as developmental schemes and capital outlay.  In 2022-23, Maharashtra is estimated to spend Rs 2,24,261 crore on committed expenditure items, which is 56% of its revenue receipts.  This comprises spending on salaries (33% of revenue receipts), pension (11%), and interest payments (12%).  Committed expenditure in 2022-23 is estimated to increase by 17% over the revised estimate of 2021-22.  Interest payments are estimated to increase by 13% whereas salaries and pension are estimated to increase by 18% and 20%, respectively.

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

Items

2020-21

Actuals

2021-22

BE

2021-22

RE

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

2022-23

BE

% change from RE 21-22 to BE 22-23

Salaries

99,611

1,22,997

1,12,062

-9%

1,31,986

18%

Pensions

32,267

34,428

38,027

10%

45,512

20%

Interest Payment

36,970

42,998

41,287

-4%

46,763

13%

Total Committed Expenditure

1,68,848

2,00,423

1,91,376

-5%

2,24,261

17%

Sources: Maharashtra Budget Documents 2022-23; PRS.

Sector-wise expenditure: The sectors listed below account for 58% of the total expenditure on sectors by the state in 2022-23.  A comparison of Maharashtra’s expenditure on the key sectors with that by other states is shown in Annexure 1.

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

Sectors

2020-21 Actuals

2021-22 BE

2021-22 RE

2022-23 BE

% change from RE 21-22 to 
 BE 22-23

Budget Provisions

2022-23 BE

Education, Sports, Arts, and Culture

62,322

74,830

71,642

80,437

12%

Rs 26,200 crore has been allocated towards assistance to non-government secondary schools and junior colleges.

Transport

16,676

25,686

31,597

31,113

-1.5%

Rs 20,133 crore has been allocated towards capital outlay on roads and bridges.

Agriculture and allied activities

35,194

26,483

26,673

29,393

10%

Rs 2,420 crore has been allocated towards crop insurance scheme.

Rs 869 crore has been allocated towards the veterinary services and animal health.

Police

15,361

21,558

18,933

24,663

30%

Rs 16,471 crore has been allocated towards district police.

Welfare of SC, ST, OBC, and Minorities

11,433

21,044

21,323

22,984

8%

Rs 1,824 crore has been allocated towards various scholarships/stipends.

Rural Development

11,373

22,194

19,411

22,844

18%

Rs 3,192 crore has been allocated towards Jawahar Gram Samrudhi Yojana.

Health and Family Welfare

17,092

19,060

26,017

22,536

-13%

Rs 3,034 crore has been allocated towards National Rural Health Mission.

Irrigation and Flood Control

9,668

17,938

15,943

18,727

17%

Rs 15,980 crore has been allocated towards capital outlay on irrigation and flood control.

Urban Development

10,177

16,050

17,250

18,347

6%

Rs 1,765 crore has been allocated towards Smart City Abhiyan.

Social Welfare and Nutrition

18,879

16,378

23,474

16,617

-29%

Rs 2,664 crore has been allocated towards integrated child development scheme.

% of total expenditure on all sectors

61%

60%

60%

58%

 

 

Sources: Maharashtra Budget Documents 2022-23; PRS.

Receipts in 2022-23

  • Total revenue receipts for 2022-23 are estimated to be Rs 4,03,427 crore, an increase of 11% over the revised estimate of 2021-22.  Of this, Rs 2,83,654 crore (70%) will be raised by the state through its own resources, and Rs 1,19,773 crore (30%) will come from the centre.  Resources from the centre will be in the form of state’s share in central taxes (13% of revenue receipts) and grants (17% of revenue receipts).
  • Devolution:  In 2022-23, the state estimates to receive Rs 51,588 crore in the form of share in central taxes, an increase of 7% over the revised estimates of 2021-22.
  • State’s own tax revenue:  Total own tax revenue of Maharashtra is estimated to be Rs 2,56,526 crore in 2022-23, an increase of 13% over the revised estimate of 2021-22.  Maharashtra’s own tax revenue as a percentage of GSDP is estimated to rise from 6.1% of GSDP in 2020-21 (as per actuals) to 7.2% of GSDP in 2022-23 (as per budget estimate).   In 2021-22, while GSDP estimate has been revised up by 7.3%, earnings from most of the own tax revenue components are estimated to be lower than the budget estimate (leading to own tax to GSDP ratio falling from 8.2% at the budget stage to 7.1% at the revised stage).
  • State’s non-tax revenue: In 2022-23, the state is estimated to earn Rs 27,128 crore in the form of the state’s own non-tax revenue, an increase of 57% over the revised estimates of 2021-22.  In 2021-22, the state’s own non-tax revenue is estimated to be 35% lower than the budget estimate.  

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

Sources

2020-21

Actuals

2021-22

BE

2021-22

RE

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

2022-23

BE

% change from RE 21-22 to BE 22-23

State's Own Tax

1,64,280

2,43,490

2,27,237

-7%

2,56,526

13%

State's Own Non-Tax

15,975

26,650

17,307

-35%

27,128

57%

Share in Central Taxes

36,479

42,044

48,261

15%

51,588

7%

Grants-in-aid from Centre

52,733

56,803

69,327

22%

68,186

-2%

Revenue Receipts

2,69,468

3,68,987

3,62,133

-2%

4,03,427

11%

Non-debt Capital Receipts

1,612

2,332

2,332

0%

2,379

2%

Net Receipts

2,71,080

3,71,319

3,64,465

-2%

4,05,806

11%

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

  • In 2022-23, SGST is estimated to be the largest source of own tax revenue (47%).  SGST revenue in 2022-23 is estimated at Rs 1,19,900 crore, which is an increase of 11% over the revised estimates of 2021-22. As per the revised estimates, the state is estimated to receive Rs 35,000 crore on account of GST compensation in 2021-22 (including back-to-back loan in lieu of compensation of Rs 13,782 crore).
  • In 2022-23, land revenue is estimated to increase by 82% over the revised estimates of 2021-22 (Table 6).  Land revenue in 2021-22 is estimated to be 45% lower than the budget estimate.  Receipts from state excise duty in 2022-23 is estimated to increase by 22% over the revised estimates of 2021-22.

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, Maharashtra has relied on GST compensation grants to achieve the guaranteed SGST revenue level.  In 2021-22, Maharashtra is estimated to receive Rs 35,000 crore in the form of GST compensation grants, which is about 15% of its own tax revenue.     Hence, beyond June 2022, Maharashtra might see a decline in the level of revenue receipts.

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

Taxes

2020-21

Actuals

2021-22

BE

2021-22

RE

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

2022-23

BE

% change from RE 21-22 to BE 22-23

State GST

69,949

1,17,807

1,07,807

-8%

1,19,900

11%

Sales Tax/ VAT

33,160

44,000

45,000

2%

50,200

12%

Stamp Duty and Registration Fees

25,428

32,000

29,500

-8%

32,000

8%

State Excise

15,089

19,500

18,000

-8%

22,000

22%

Taxes on Vehicles

6,655

10,000

9,150

-9%

10,500

15%

Taxes and Duties on Electricity

8,354

10,404

10,404

0%

11,444

10%

Land Revenue

2,063

4,000

2,200

-45%

4,000

82%

GST Compensation Grants

17,423

18,000

21,218

18%

9,725

-54%

GST Compensation Loans*

-

-

13,782

 

-

 

Note: *The state has not shown any receipt in the form of back-to-back loan in lieu of GST compensation in 2020-21.   However, as per Union Ministry of Finance, the state received Rs 11,977 crore on this account in 2020-21.
Sources: Maharashtra Budget Documents 2022-23; PRS.

Deficits and Debt Targets for 2022-23

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:   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 reduce its liabilities.  In 2022-23, the state is estimated to observe a revenue deficit of Rs 24,353 crore, which is 0.68% of its GSDP.  In comparison, in 2020-21, the state observed a revenue deficit of 1.52% of GSDP (Rs 41,142 crore).  In 2021-22, the state is estimated to observe a revenue deficit of 0.96% of GSDP (Rs 30,724 crore), higher than the budget estimate of 0.34% of GSDP.

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 2.50% of GSDP.  It is within the limit of 4% of GSDP permitted by the central government in 2022-23 (of which, 0.5% of GSDP will be made available upon undertaking power sector reforms).  In 2021-22, fiscal deficit is estimated to be 2.79% of GSDP, higher than the budget estimate of 2.24% of GSDP.  Fiscal deficit in 2021-22 is within the limit of 4.5% of GSDP permitted by the central government (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 the public account.   At the end of March 2023, the outstanding liabilities of the state is estimated to be 18.14% of the GSDP.  The outstanding liabilities are estimated to increase by about 1.64% of GSDP as compared to 2019-20 (16.50% of GSDP).  The outstanding liabilities of the state is estimated to rise further to 18.65% of GSDP at the end of March 2024.

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

image

Note: RE is Revised Estimates; BE is budget estimates.  Positive sign indicates a surplus, negative sign indicates a deficit.  *Figures for 2023-24 and 2024-25 are projections.
Sources: Maharashtra Budget Documents 2022-23; PRS.  

Figure  3 : Outstanding Liabilities (% of GSDP)

image

Note: RE is Revised Estimates; BE is budget estimates.  *Figures for 2023-24 and 2024-25 are projections.
Sources: Maharashtra Budget Documents 2022-23; PRS.  

 

Outstanding Government Guarantees: Outstanding liabilities of states do not include a few other liabilities that are contingent in nature, which states may have to honour in certain cases.  State governments guarantee the borrowings of State Public Sector Enterprises (SPSEs) from financial institutions.  In 2020-21, the outstanding guarantee of the state was 1.53% of GSDP, which is estimated to rise to 1.74% of GSDP in 2022-23.

Annexure 1:  Comparison of states’ expenditure on key sectors

The graphs below compare Maharashtra’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 Maharashtra) as per their budget estimates of 2021-22. [1]

  • Education:  Maharashtra has allocated 16.3% of its total expenditure for education in 2022-23.  This is higher than the average allocation (15.2%) for education by all states (as per 2021-22 Budget Estimates).
  • Health:  Maharashtra has allocated 4.6% of its total expenditure on health, which is significantly lower than the average allocation for health by states (6%).
  • Agriculture:  The state has allocated 6% of its total expenditure towards agriculture and allied activities.  This is marginally lower than the average allocation for agriculture by states (6.2%).
  • Rural development:  Maharashtra has allocated 4.6% of its expenditure towards rural development.  This is lower than the average allocation for rural development by states (5.7%).
  • Police:  Maharashtra has allocated 5% of its total expenditure on police, which is higher than the average expenditure on police by states (4.3%).
  • Roads and bridges:  Maharashtra has allocated 5.7% of its total expenditure on roads and bridges, which is higher than the average allocation by states (4.7%).

image

image

image

image

image

image

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

Annexure 2:  Comparison of 2020-21 Budget Estimates and Actuals

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)

3,49,765

2,71,080

-22%

1.  Revenue Receipts (a+b+c+d)

3,47,456

2,69,468

-22%

a.  Own Tax Revenue

2,25,071

1,64,280

-27%

b.  Own Non-Tax Revenue

20,506

15,975

-22%

c.  Share in central taxes

48,109

36,479

-24%

d.  Grants-in-aid from the Centre

53,770

52,733

-2%

     Of which GST compensation grants

10,000

17,423

74%

2.  Non-Debt Capital Receipts

2,309

1,612

-30%

3.  Borrowings

81,106

1,18,516

46%

      Of which GST compensation loan

0

0

-

Net Expenditure (4+5+6)

4,04,385

3,42,638

-15%

4.  Revenue Expenditure

3,56,968

3,10,610

-13%

5.  Capital Outlay

45,124

29,687

-34%

6.  Loans and Advances

2,293

2,342

2%

7.  Debt Repayment

29,700

57,587

94%

Revenue Deficit

9,511

41,142

333%

Revenue Deficit (as % of GSDP)

0.29%

1.52%

 

Fiscal Deficit

54,618

71,558

31%

Fiscal Deficit (as % of GSDP)

1.69%

2.64%

 

Note: BE: Budget Estimates.
Sources: Maharashtra 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

4,000

2,063

-48%

State GST

1,07,146

69,949

-35%

Taxes on Vehicles

9,500

6,655

-30%

State Excise

19,225

15,089

-22%

Sales Tax/ VAT

40,000

33,160

-17%

Stamp Duty and Registration Fees

30,000

25,428

-15%

Taxes and Duties on Electricity

9,500

8,354

-12%

Sources: Maharashtra 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

Water Supply and Sanitation

6,297

2,193

-65%

Housing

6,184

2,274

-63%

Rural Development

21,467

11,373

-47%

Urban Development

18,090

10,177

-44%

Welfare of SC, ST, OBC, and Minorities

19,529

11,433

-41%

Irrigation and Flood Control

14,905

9,668

-35%

Police

20,230

15,361

-24%

Education, Sports, Arts, and Culture

73,048

62,322

-15%

Transport

18,959

16,976

-10%

of which Roads and Bridges

17,397

15,996

-8%

Health and Family Welfare

17,288

17,092

-1%

Energy

10055

10,035

0%

Agriculture and allied activities

30,127

35,194

17%

Social Welfare and Nutrition

15,193

18,879

24%

Source: Maharashtra Budget Documents of various years; PRS.

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

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