The Deputy Chief Minister of Maharashtra, Mr. Devendra Fadnavis, presented the Budget for the state for the financial year 2023-24 on March 9, 2023.

Budget Highlights

  • The Gross State Domestic Product (GSDP) of Maharashtra for 2023-24 (at current prices) is projected to be Rs 38,79,792 crore, amounting to growth of 10% over 2022-23.

  • Expenditure (excluding debt repayment) in 2023-24 is estimated to be Rs 5,47,450 crore, an increase of 3.6% over the revised estimates of 2022-23.  In addition, debt of Rs 54,558 crore will be repaid by the state.

  • Receipts (excluding borrowings) for 2023-24 are estimated to be Rs 4,51,949 crore, an increase of 4.3% as compared to the revised estimate of 2022-23.  In 2022-23, receipts (excluding borrowings) are estimated to increase by Rs 27,497 crore (increase of 6.8%) at the revised stage.

  • Revenue deficit in 2023-24 is estimated to be 0.4% of GSDP (Rs 16,122 crore), lower than the revised estimates for 2022-23 (0.6% of GSDP).  In 2022-23, the revenue deficit is expected to be lower than the budget estimate (0.7% of GSDP).

  • Fiscal deficit for 2023-24 is targeted at 2.5% of GSDP (Rs 95,501 crore).   In 2022-23, as per the revised estimates, fiscal deficit is expected to be 2.7% of GSDP, higher than the budget estimates (2.5%) for the year.

Policy Highlights

  • Income transfers for farmers: The Namo Shetkari Mahasanman Nidhi Scheme will provide an annual amount of Rs 6,000 per farmer, and seeks to benefit 1.2 crore farmer families.  The Scheme has a proposed outlay of Rs 6,900 crore in 2023-24.

  • Women: Girls born in families with an annual income below one lakh rupees will receive grants at various stages of completing education, and will receive a grant of Rs 75,000 on attaining age of 18.  A 50% concession will also be provided in state transport bus tickets for women.

  • Tax changes: Profession tax limit for women will be increased from Rs 10,000 to Rs 25,000.  VAT on Aviation Turbine Fuel (ATF) will be reduced from 25% to 18%.

  • Amnesty: An amnesty scheme for waiving taxes payable prior to the implementation of GST has been announced.   It proposes a full waiver for arrears up to two lakh rupees, and an 80% waiver for arrears between Rs 50 lakh and two lakh rupees.  The Scheme will apply to arrears pending as of May 1, 2023.

Maharashtra’s Economy

  • GSDP:  In 2022-23, Maharashtra’s GSDP (at constant prices) is estimated to grow at 6.8% over a growth of 9% in 2021-22.  In comparison, national GDP is estimated to grow at 7% in 2022-23.

  • Sectors:  In 2021-22, services sector grew at 10.6% over a low base in 2020-21.  Manufacturing sector grew at 4% (see Figure 1).  Agriculture sector grew at 9.8% in 2020-21, and 8.8% in 2021-22.  In 2021-22, agriculture, manufacturing and services sectors are estimated to contribute 16%, 25%, and 59% to the economy, respectively (at current prices).

  • Per capita GSDP:  The per capita GSDP of Maharashtra in 2021-22 (at current prices) is estimated at Rs 2,48,632, an annualised increase of 6% over 2018-19.

Figure 1: Maharashtra GSDP and Sectoral Growth at Constant Prices (2011-12)

image

Note: These figures are at constant prices (2011-12) which means the growth rate has been adjusted for inflation. Sources: Economic Survey of Maharashtra 2022-23; PRS.

Budget Estimates for 2023-24

  • Total expenditure (excluding debt repayment) in 2023-24 is targeted at Rs 5,47,450 crore.  This is an increase of 3.6% over the revised estimate of 2022-23.  This expenditure is proposed to be met through receipts (excluding borrowings) of Rs 4,51,949 crore and net borrowings of Rs 76,649 crore.  Total receipts for 2023-24 (other than borrowings) are expected to register an increase of 4.3% over the revised estimate of 2022-23.

  • Revenue deficit in 2023-24 is estimated to be 0.4% of GSDP (Rs 16,122 crore), lower than the revised estimates for 2022-23 (0.6% of GSDP).  Fiscal deficit for 2023-24 is targeted at 2.5% of GSDP (Rs 95,501 crore), lower than the revised estimates for 2022-23 (2.7% of GSDP).  

Table  1 : Budget 2023-24 - Key figures (in Rs crore)

Items

2021-22 Actuals

2022-23 Budgeted

2022-23 Revised

% change from BE 2022-23 to RE 2022-23

2023-24 Budgeted

% change from RE 2022-23 to BE 2023-24

Total Expenditure

4,34,825

5,48,408

5,81,268

6.0%

6,02,008

3.6%

(-) Repayment of debt

36,033

53,003

52,983

0.0%

54,558

3.0%

Net Expenditure (E)

3,98,792

4,95,405

5,28,286

6.6%

5,47,450

3.6%

Total Receipts

4,25,077

5,33,745

5,54,144

3.8%

5,83,156

5.2%

(-) Borrowings

90,587

1,27,938

1,20,841

-5.5%

1,31,207

8.6%

Net Receipts (R)

3,34,490

4,05,806

4,33,304

6.8%

4,51,949

4.3%

Fiscal Deficit (E-R)

64,302

89,598

94,982

6.0%

95,501

0.5%

as % of GSDP

2.1%

2.5%

2.7%

 

2.5%

 

Revenue Deficit

16,374

24,353

19,965

-18.0%

16,122

-19.2%

as % of GSDP

0.5%

0.7%

0.6%

 

0.4%

 

Primary Deficit

24,144

42,835

49,101

14.6%

44,853

-8.7%

as % of GSDP

0.8%

1.2%

1.4%

 

1.2%

 

Note: BE is Budget Estimates; RE is Revised Estimates.
Sources: Annual Financial Statement, Maharashtra Budget 2023-24; PRS.

Expenditure in 2023-24

  • Revenue expenditure for 2023-24 is proposed to be Rs 4,65,645 crore, an increase of 3% over the revised estimate of 2022-23.  This includes the expenditure on salaries, pensions, interest, grants, and subsidies.

  • Capital outlay for 2023-24 is proposed to be Rs 73,901 crore, an increase of 2% over the revised estimate of 2022-23.  Capital outlay indicates the expenditure towards creation of assets.    In 2022-23, loans and advances given by the state are expected to be Rs 4,944 crore, which is Rs 2,530 crore higher than budgeted (an increase of 105%).

Power Subsidy

Maharashtra proposes to provide subsidies worth Rs 30,452 crore in 2023-24, 36% lower than the revised estimates for 2022-23.  However, subsidies accounted for Rs 47,734 crore in 2022-23, 70% higher than the budgeted amount.

Power subsidy accounted for Rs 12,295 crore at the revised stage in 2022-23.  This will be reduced to Rs 7,708 crore (37% lower) in 2023-24.

Table  2 :  Expenditure budget 2023-24 (in Rs crore)

Items

2021-22 Actuals

2022-23 Budgeted

2022-23 Revised

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

2023-24 Budgeted

% change from RE 22-23 to BE 23-24

Revenue Expenditure

3,49,686

4,27,780

4,50,890

5%

4,65,645

3%

Capital Outlay

46,670

65,210

72,452

11%

73,901

2%

Loans given by the state

2,436

2,414

4,944

105%

7,904

60%

Net Expenditure

3,98,792

4,95,405

5,28,286

7%

5,47,450

4%

Sources:  Annual Financial Statement, Maharashtra Budget 2023-24; 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 2023-24, Maharashtra is estimated to spend Rs 2,50,156 crore on committed expenditure, which is 56% of its estimated revenue receipts.   This comprises spending on salaries (32% of revenue receipts), pension (12%), and interest payments (11%).  In 2022-23, as per the revised estimates, 51% of revenue receipts were spent towards committed expenditure, lower than in 2021-22 (56%).

Table  3 : Committed Expenditure in 2023-24 (in Rs crore)

Committed Expenditure

2021-22 Actuals

2022-23 Budgeted

2022-23 Revised

% change from BE 2022-23 to RE 2022-23

2023-24 Budgeted

% change from RE 2022-23 to BE 2023-24

Salaries

1,07,776

1,31,986

1,28,871

-2%

1,44,771

12%

Pension

38,513

45,512

46,614

2%

54,737

17%

Interest

40,158

46,763

45,881

-2%

50,648

10%

Committed Expenditure

1,86,447

2,24,261

2,21,366

-1%

2,50,156

13%

Sources: Annual Financial Statement, Maharashtra Budget 2023-24; PRS.

Sector-wise expenditure: The sectors listed below account for 59% of the total expenditure on sectors by the state in 2023-24.  A comparison of Maharashtra’s expenditure on key sectors with that by other states is shown in Annexure 1.

Table  4 : Sector-wise expenditure under Maharashtra Budget 2023-24 (in Rs crore)

Sector

2021-22 Actuals

2022-23 Budgeted

2022-23 Revised

2023-24 Budgeted

% change from RE 2022-23 to BE 2023-24

Budget Provisions

Education, Sports, Arts, and Culture

68,770

80,437

83,316

89,705

8%

Assistance of Rs 28,541 crore will be provided to Zilla Parishads for Primary Education.

Rs 1,080 crore have been allocated for various scholarships for technical education.

Agriculture and Allied Activities

22,977

29,393

38,734

32,077

-17%

Crop insurance subsidy of Rs 2,490 crore will be provided under various schemes.

Rs 916 crore has been allocated for veterinary services and animal health. 

Roads and Bridges

27,886

27,902

37,672

31,563

-16%

Assistance of Rs 2,570 crore will be provided to public sector and other undertakings.  In 2022-23, the assistance increased by 50% at the revised stage.

Police

17,426

24,663

21,409

26,906

26%

Rs 18,047 crore has been allocated for district police.

Rural Development

10,852

22,844

22,843

25,308

11%

Rs 3,103 crore has been allocated towards Jawahar Gram Samrudhi Yojana.

Health and Family Welfare

21,067

22,536

24,988

25,015

0%

Rs 1,624 crore has been allocated for building primary health centres in rural areas.

Welfare of SC, ST, OBC, and Minorities

17,279

22,984

22,801

24,787

9%

Scholarships worth Rs 582 crore will be provided to tribal students under various schemes.

Urban Development

13,166

18,347

25,441

20,761

-18%

Municipal Corporations will be provided assistance of Rs 7,854 crore.

Municipalities/Municipal Councils will be provided assistance of Rs 5,361 crore.

Social Welfare and Nutrition

19,881

16,617

22,314

20,050

-10%

Rs 1,530 crore has been allocated towards the Shravan Bal Seva Rajya Nivruti Vetan Yojana.

Irrigation and Flood Control

12,426

18,727

16,645

19,958

20%

Capital outlay of Rs 834 crore is proposed on minor irrigation.

% of total expenditure on all sectors

58%

58%

60%

59%

-3%

 

Sources: Annual Financial Statement, Maharashtra Budget 2023-24; PRS.

Receipts in 2023-24

  • Total revenue receipts for 2023-24 are estimated to be Rs 4,49,523 crore, an increase of 4% over the revised estimate of 2022-23.  Of this, Rs 3,22,351 crore (72%) will be raised by the state through its own resources, and Rs 1,27,172 crore (28%) will come from the centre.  Resources from the centre will be in the form of state’s share in central taxes and grants, which are 14% of revenue receipts each.

  • Devolution:  In 2023-24, state’s share in central taxes is estimated at Rs 64,525 crore, an increase of 8% over the revised estimate of 2022-23.

  • Grants from the centre in 2023-24 is estimated at Rs 62,647 crore, a decrease of 14% over the revised estimates for 2022-23.

  • State’s own tax revenue:  Maharashtra’s total own tax revenue is estimated to be Rs 2,98,181 crore in 2023-24, an increase of 8% over the revised estimate of 2022-23.  Own tax revenue as a percentage of GSDP is estimated at 7.7% in 2023-24, marginally lower than the revised estimates for 2022-23 (7.8%).   As per the actual figures for 2021-22, own tax revenue as a percentage of GSDP was 7.1%.

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

Items

2021-22 Actuals

2022-23 Budgeted

2022-23 Revised

% change from BE 2022-23 to RE 2022-23

2023-24 Budgeted

% change from RE 2022-23 to BE 2023-24

State's Own Tax

2,20,982

2,56,526

2,75,786

8%

2,98,181

8%

State's Own Non-Tax

19,307

27,128

22,054

-19%

24,170

10%

Share in Central Taxes

54,263

51,588

60,001

16%

64,525

8%

Grants from Centre

38,760

68,186

73,083

7%

62,647

-14%

Revenue Receipts

3,33,312

4,03,427

4,30,925

7%

4,49,523

4%

Non-debt Capital Receipts

1,179

2,379

2,379

0%

2,427

2%

Net Receipts

3,34,490

4,05,806

4,33,304

7%

4,51,949

4%

BE is Budget Estimates; RE is Revised Estimates.
Sources: Annual Financial Statement, Maharashtra Budget 2023-24; PRS.

  • In 2023-24, State GST is estimated to be the largest source of own tax revenue (46% share).  State GST revenue is estimated to increase by 8% over the revised estimates of 2022-23.     The receipt on this account increased by 5% in 2022-23 at the revised stage.

  • Stamp duty and registration fees account for 15% of own tax revenue, and increased by 25% in 2022-23 at the revised stage.  In 2023-24, receipts on this account are expected to increase by 13%.

Tax Collection

In 2023-24, Maharashtra is estimated to earn Rs 56,200 crore from Sales Tax/VAT, which is a 2% increase over the revised estimates for 2022-23.  In 2023-24, the government has proposed to reduce VAT on Aviation Turbine Fuel from 25% to 18%.  The 15th Finance Commission had noted that Sales Tax/VAT have been over leveraged in states, and other sources of tax revenue such as stamps duty may be explored.  In 2023-24, collection from stamp duty is estimated to be 1.16% of GSDP, an increase of 13% over the revised estimates of 2022-23.

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

Head

2021-22 Actuals

2022-23 Budgeted

2022-23 Revised

% change from BE 2022-23 to RE 2022-23

2023-24 Budgeted

% change from RE 2022-23 to BE 2023-24

State GST

97,305

1,19,900

1,25,411

5%

1,36,041

8%

Sales Tax/ VAT

45,924

50,200

55,000

10%

56,200

2%

Stamps Duty and Registration Fees

35,594

32,000

40,000

25%

45,000

13%

Taxes on Vehicles

9,080

10,500

11,450

9%

12,500

9%

State Excise

17,221

22,000

23,000

5%

25,200

10%

Land Revenue

3,065

4,000

3,000

-25%

4,500

50%

Taxes and Duties on Electricity

8,384

11,444

11,444

0%

12,000

5%

GST Compensation Grants

17,834

9,725

24,120

148%

11,113

-54%

GST Compensation Loans

13,782

-

-

 

-

 

Sources: Annual Financial Statement, Revenue Budget, and Maharashtra Budget 2023-24; PRS.

Deficits, Debt, and FRBM Targets for 2023-24

The Maharashtra Fiscal Responsibility 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 those expenses which do not increase its assets or reduce its liabilities.  The budget estimates a revenue deficit of Rs 16,122 crore (or 0.4% of the GSDP) in 2023-24.

Fiscal deficit:  It is the excess of total expenditure over total receipts.  This gap is filled by borrowings by the government and leads to an increase in total liabilities.  In 2023-24, the fiscal deficit is estimated to be 2.5% of GSDP.  For 2023-24, the central government has permitted fiscal deficit of up to 3.5% of GSDP to states, of which 0.5% of GSDP will be available only upon carrying out certain power sector reforms. As per the revised estimates, in 2022-23, the fiscal deficit of the state is expected to be 2.7% of GSDP.  Fiscal deficit is projected to be lowered to 2% of GSDP by 2025-26.

Outstanding liabilities:  Outstanding liabilities are the accumulation of total borrowings at the end of a financial year, it also includes any liabilities on public account.  At the end of 2023-24, the outstanding liabilities is estimated to be 18.2% of GSDP, marginally higher than the revised estimate for 2022-23 (18.1% of GSDP).  The outstanding liabilities have risen as compared to 2019-20 level (16.5% of GSDP).

Figure  1 : Revenue and Fiscal Deficit (% of GSDP) 

image

Note: *Figures for 2024-25 and 2025-26 are projections; For 2020-21 and 2021-22, deficits reported without treating GST compensation loans as grants.  RE is Revised Estimates; BE is budget estimates.
Sources: Medium Term Fiscal Policy, Maharashtra Budget 2023-24; PRS.

Figure  2 : Outstanding Liabilities (as % of GSDP)

image

Note: For 2020-21 and 2021-22, deficits reported without treating GST compensation loans as grants. RE is Revised Estimates; BE is budget estimates.
Sources: Medium Term Fiscal Policy, Maharashtra Budget 2023-24; 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.  As of March 31, 2022, the state’s outstanding guarantee is estimated to be Rs 51,263 crore, which is 1.3% of Maharashtra’s GSDP in 2021-22.

Annexure 1:  Comparison of states’ expenditure on key sectors

The graphs below compare Maharashtra’s expenditure in 2023-24 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 31 states (including Maharashtra) as per their budget estimates of 2022-23. [1]

  • Education: Maharashtra has allocated 16.6% of its expenditure on education in 2023-24.  This is higher than the average allocation for education by states in 2022-23 (14.8%).

  • Health:  Maharashtra has allocated 4.6% of its total expenditure towards health, which is lower than the average allocation for health by states (6.3%).

  • Agriculture:  Maharashtra has allocated 5.9% of its expenditure on agriculture.  This is marginally higher than the average allocation for agriculture by states (5.8%).

  • Roads and bridges:  Maharashtra has allocated 5.8% of its expenditure towards roads and bridges.  This is higher than the average allocation towards roads and bridges by states (4.5%).

  • Irrigation:  Maharashtra has allocated 3.7% of its total expenditure towards irrigation, which is higher than the average expenditure on irrigation by states (3.5%).

  • Urban Development:  Maharashtra has allocated 3.8% of its total expenditure towards urban development, which is higher than the average allocation by states (3.5%).

image

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Note: 2021-22, 2022-23 (BE), 2022-23 (RE), and 2023-24 (BE) figures are for Maharashtra.
Sources: Annual Financial Statement, Maharashtra Budget 2023-24; various state budgets; PRS.

[1]  The 31 states include the Union Territories of Delhi, Jammu and Kashmir, and Puducherry .

Annexure 2:  Comparison of 2021-22 Budget Estimates and Actuals

The following tables compare the actuals of 2021-22 with budget estimates for that year.

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

Particular

2021-22 BE

2021-22 Actuals

% change from BE to Actuals

Net Receipts (1+2)

3,71,319

3,34,490

-10%

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

3,68,987

3,33,312

-10%

a. Own Tax Revenue

2,43,490

2,20,982

-9%

b. Own Non-Tax Revenue

26,650

19,307

-28%

c. Share in central taxes

42,044

54,263

29%

d. Grants-in-aid from the Centre

56,803

38,760

-32%

Of which GST compensation grants

18,000

0

-100%

2. Non-Debt Capital Receipts

2,332

1,179

-49%

3. Borrowings

1,22,566

90,587

-26%

Of which GST compensation loan 0 0  

Net Expenditure (4+5+6)

4,37,960

3,98,792

-9%

4. Revenue Expenditure

3,79,212

3,49,686

-8%

5. Capital Outlay

55,613

46,670

-16%

6. Loans and Advances

3,135

2,436

-22%

7. Debt Repayment

46,131

36,033

-22%

Revenue Deficit

10,225

16,374

60%

Revenue Deficit (as % of GSDP)

0.3%

-0.5%

 

Fiscal Deficit

66,641

64,302

-4%

Fiscal Deficit (as % of GSDP) 2.2% 2.1%  

Source: Maharashtra Budget Documents of various years; PRS.

Table  8 : Key Components of State's Own Tax Revenue

Tax Head

2021-22 BE

2021-22 Actuals

% change from BE to Actuals

Land Revenue

4,000

3,065

-23%

Taxes and Duties on Electricity

10,404

8,384

-19%

State GST

1,17,807

97,305

-17%

State Excise

19,500

17,221

-12%

Taxes on Vehicles

10,000

9,080

-9%

Sales Tax/ VAT

44,000

45,924

4%

Stamps Duty and Registration Fees

32,000

35,594

11%

Source: Maharashtra Budget Documents of various years; PRS.

Table  9 :  Allocation towards Key Sectors

Sector

2021-22 BE

2021-22 Actuals

% change from BE to Actuals

Housing

6,523

1,765

-73%

Rural Development

22,194

10,852

-51%

Water Supply and Sanitation

5,860

2,885

-51%

Irrigation and Flood Control

17,938

12,426

-31%

Energy

10,588

13,455

27%

Social Welfare and Nutrition

16,378

19,881

21%

Police

21,558

17,426

-19%

Urban Development

16,050

13,166

-18%

Welfare of SC, ST, OBC, and Minorities

21,044

17,279

-18%

Agriculture and Allied Activities

26,483

22,977

-13%

Transport

25,686

29,057

13%

of which Roads and Bridges

22,608

27,886

23%

Health and Family Welfare

19,060

21,067

11%

Education, Sports, Arts, and Culture

74,830

68,770

-8%

Source: Maharashtra Budget Documents of various years; PRS.

 

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