Meghalaya Chief Minister Conrad K Sangma presented the Budget for the state for the financial year 2023-24 on March 23, 2023.

Budget Highlights

  • The Gross State Domestic Product (GSDP) of Meghalaya for 2023-24 (at current prices) is projected to be Rs 46,600 crore, amounting to a growth of 11.5% over 2022-23.

  • Expenditure (excluding debt repayment) in 2023-24 is estimated to be Rs 21,034 crore, an increase of 8% over the revised estimates of 2022-23.  In addition, debt of Rs 988 crore will be repaid by the state.

  • Receipts (excluding borrowings) for 2023-24 are estimated to be Rs 19,442 crore, an increase of 10% as compared to the revised estimate of 2022-23.  In 2022-23, as per revised estimate, receipts (excluding borrowings) are estimated to be 10% higher than budgeted.

  • Revenue surplus in 2023-24 is estimated to be 4.8 % of GSDP (Rs 2,228 crore), higher than the revised estimate for 2022-23 (3.6% of GSDP).  In 2022-23, the revenue surplus is expected to be higher than the budget estimate (1.6% of GSDP).

  • Fiscal deficit for 2023-24 is targeted at 3.4% of GSDP (Rs 1,592 crore).   In 2022-23, as per the revised estimates, fiscal deficit is expected to be 4.5% of GSDP, same as the budget estimates for the year.

Policy Highlights

  • Textiles: A program for cluster-based skill development will be implemented in 2023-24, targeting 10,000 weavers.  Common facility centres for weavers will also be built under the programme.

  • Connectivity: Chief Minister’s Rural Connectivity Scheme will be implemented to connect villages not covered under PMGSY.  Suspension and footbridges will be built across streams and rivers to improve connectivity for villages.  ‘Integrated Transport Network Development Plan’ and ‘Road Asset Management System’ are under development to streamline the building of new roads and maintain existing road network.

  • Healthcare: Chief Minister’s Affordable Drug Centres scheme will be implemented to provide generic medicines at cheaper rates.

  • Tourism: Under the Meghalaya’s Homestay Scheme, construction of 5,000 homestays is targeted between 2023-24 and 2027-28, including 1,000 homestays to be constructed in 2023-24.  The scheme is expected to create 25,000 jobs.

Meghalaya’s Economy

  • GSDP:  In 2022-23, Meghalaya’s GSDP (at constant prices) is estimated to grow at 9.1%.  In comparison, India’s real GDP is estimated to grow by 7.2% in 2022-23.

  • Sectors:  In 2022-23, the manufacturing sector is estimated to grow at 13.7 %.  Services and agriculture sectors are estimated to grow at 9.7% and 3.7%, respectively.

  • In 2022-23, agriculture, manufacturing, and services sectors are estimated to contribute 21%, 19%, and 61% to the economy, respectively (at current prices).

  • Per capita GSDP:  The per capita GSDP of Meghalaya in 2022-23 (at current prices) is estimated at Rs 1,10,002 an increase of 8% from 2021-22 (Rs 1,01,776).   In comparison, India’s per capita GDP in 2022-23 is estimated at Rs.1,96,983.

Figure 1: Growth in Meghalaya’s GSDP 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 Meghalaya 2022-23; PRS.

Budget Estimates for 2023-24

  • Total expenditure (excluding debt repayment) in 2023-24 is targeted at Rs 21,034 crore, an increase of 8% over the revised estimate of 2022-23.  This expenditure is proposed to be met through receipts (excluding borrowings) of Rs 19,442 crore and net borrowings of Rs 1,351 crore.  Total receipts for 2023-24 (other than borrowings) are expected to register an increase of 10% over the revised estimate of 2022-23.

  • In 2022-23, as per the revised estimate, total expenditure (excluding debt repayment) is estimated to be 9% higher than the budget estimate.  Receipts (excluding borrowings) are estimated to be 10% higher than the budget estimate.  This increase is anticipated mainly on account of higher central transfers than budgeted (13% higher).

  • Revenue surplus in 2023-24 is estimated to be 4.8 % of GSDP (Rs 2,228 crore), higher than the revised estimates for 2022-23 (3.6% of GSDP).  A high revenue surplus relative to GSDP in both years is mainly owing to high central transfers and a low GSDP base.  Central transfers are estimated to comprise about 80% of the state’s revenue receipts in both 2022-23 and 2023-24.

  • Fiscal deficit for 2023-24 is targeted at 3.4% of GSDP (Rs 1,592 crore), lower than the revised estimates for 2022-23 (4.5% of GSDP).  In 2023-24, the projected fiscal deficit is within the limit prescribed by the central government (3.5% of GSDP).  In 2022-23, Meghalaya’s fiscal deficit is estimated to be higher than the limit fixed by the central government (4% of GSDP). In both 2022-23 and 2023-24, of the prescribed fiscal deficit limit, 0.5% of GSDP is conditional upon certain power sector reforms.

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

Items

2021-22 Actuals

2022-23
BE

2022-23
RE

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

2023-24
BE

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

Total Expenditure

18,674

18,881

23,280

23%

22,022

-5%

(-) Repayment of debt

2,216

964

3,750

289%

988

-74%

Net Expenditure (E)

16,457

17,917

19,530

9%

21,034

8%

Total Receipts

18,319

18,700

22,853

22%

21,781

-5%

(-) Borrowings

4,020

2,632

5,184

97%

2,339

-55%

Net Receipts (R)

14,299

16,069

17,669

10%

19,442

10%

Fiscal Deficit (E-R)

2,159

1,849

1,861

1%

1,592

-14%

as % of GSDP

5.7%

4.5%

4.5%

 

3.4%

 

Revenue Surplus

654

660

1,497

127%

2,228

49%

as % of GSDP

1.7%

1.6%

3.6%

 

4.8%

 

Primary Deficit

1,196

738

832

13%

424

-49%

as % of GSDP

3.3%

1.8%

2%

 

0.9%

 

Note: Fiscal deficit in 2021-22 is lower by Rs 200 crore as compared to the budget documents, as transfer of Rs 200 crore to contingency fund has not been included in the state’s expenditure.  BE is Budget Estimates; RE is Revised Estimates.
Sources: Annual Financial Statement, Disclosure Statement, Meghalaya Budget 2023-24; PRS.

Expenditure in 2023-24

  • Revenue expenditure for 2023-24 is proposed to be Rs 17,186 crore, an increase of 6% 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 3,812 crore, an increase of 14% over the revised estimate of 2022-23.  Capital outlay indicates the expenditure towards creation of assets.   In 2022-23, as per revised estimates, capital outlay is estimated to be 36% higher than the budget estimates.  This is driven by a 59% increase in capital outlay for education, sports, arts and culture, and a 129% increase in capital outlay towards urban development at the revised stage.

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

Items

2021-22 Actuals

2022-23 BE

2022-23 RE

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

2023-24 BE

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

Revenue Expenditure

13,620

15,376

16,149

5%

17,186

6%

Capital Outlay

2,752

2,463

3,343

36%

3,812

14%

Loans given by the state

85

79

38

-52%

37

-3%

Net Expenditure

16,457

17,917

19,530

9%

21,034

8%

BE is Budget Estimates; RE is Revised Estimates.
Sources:  Annual Financial Statement, Meghalaya 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 the budget allocated for committed expenditure items limits the state’s flexibility to decide on other expenditure priorities such as capital outlay.  In 2023-24, Meghalaya is estimated to spend Rs 8,761 crore on committed expenditure, which is 45% of its estimated revenue receipts.  This comprises spending on salaries (30% of revenue receipts), pension (9%), and interest payments (6%).  Expenditure on pensions for 2023-24 is estimated to be Rs 1,794 crore, a 22% increase over the revised estimates of 2022-23.  In 2022-23, 45% of revenue receipts are estimated to be spent towards committed expenditure as per revised estimates, lower than 2021-22 (50% of revenue receipts).

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

Items

2021-22

Actuals

2022-23

BE

2022-23

RE

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

2023-24

BE

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

Salaries

4,738

5,625

5,496

-2%

5,798

5%

Pensions

1,366

1,469

1,469

0%

1,794

22%

Interest Payment

963

1,110

1,029

-7%

1,169

14%

Total Committed Expenditure

7,067

8,204

7,995

-3%

8,761

10%

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

Sector-wise expenditure: The sectors listed below account for 60% of the total expenditure on sectors by the state in 2023-24.  A comparison of Meghalaya’s expenditure on key sectors with that of other states is shown in Annexure 1.

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

Sector

2021-22 Actuals

2022-23 
 BE

2022-23 RE

2023-24 
 BE

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

Education, Sports, Arts, and Culture

2,390

2,816

3,199

3,109

-3%

Health and Family Welfare

1,682

1,618

1,696

1,805

6%

Rural Development

875

1,278

1,357

1,588

17%

Transport

1,610

1,501

1,773

1,501

-15%

Police

1,004

1,163

1,120

1,207

8%

Agriculture and Allied Activities

889

1,068

1,005

1,196

19%

Social Welfare and Nutrition

514

701

687

832

21%

Energy

689

458

1,052

709

-33%

Water Supply and Sanitation

924

589

626

640

2%

Urban Development

594

299

484

487

1%

% of total expenditure on all sectors

65%

63%

64%

60%

-7%

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

Receipts in 2023-24

  • Total revenue receipts for 2023-24 are estimated to be Rs 19,414 crore, an increase of 10% over the revised estimate of 2022-23.  Of this, Rs 3,947 crore (20%) will be raised by the state through its own resources, and Rs 15,467 crore (80%) will come from the centre.  Resources from the centre will be in the form of state’s share in central taxes (40% of revenue receipts) and grants (39% of revenue receipts).

  • Devolution:  In 2023-24, state’s share in central taxes is estimated at Rs 7,835 crore, an increase of 6% over the revised estimate of 2022-23.  In 2022-23, the devolution of central taxes is estimated to be 18% higher as compared to the budget estimate.

  • Grants from the centre in 2023-24 are estimated at Rs 7,633 crore, an increase of 9% over the revised estimate of 2022-23.  In 2022-23, grants from the centre are expected to be 9% higher than the budgeted.

  • State’s own tax revenue:  Meghalaya’s total own tax revenue is estimated to be Rs 3,205 crore in 2023-24, an increase of 22% over the revised estimate of 2022-23.  Own tax revenue as a percentage of GSDP is estimated at 6.9% in 2023-24, higher than the revised estimates for 2022-23 (6.3%).   As per the actual figures for 2021-22, own tax revenue as a percentage of GSDP was 6.1%.

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

Sources

2021-22

Actuals

2022-23

BE

2022-23

RE

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

2023-24

BE

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

State's Own Tax

2,300

2,575

2,636

2%

3,205

22%

State's Own Non-Tax

525

731

590

-19%

743

26%

Share in Central Taxes

6,581

6,264

7,386

18%

7,835

6%

Grants-in-aid from Centre

4,869

6,466

7,034

9%

7,633

9%

Revenue Receipts

14,274

16,035

17,646

10%

19,414

10%

Non-debt Capital Receipts

24

33

23

-32%

28

22%

Net Receipts

14,299

16,069

17,669

10%

19,442

10%

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

  • In 2023-24, State GST is estimated to be the largest source of own tax revenue (56% share).  State GST revenue is estimated to increase by 22% over the revised estimates of 2022-23.

  • Sales Tax/VAT is estimated to account for 25% of the total own tax revenue in 2023-24.  Revenue from sales tax/VAT is expected to increase by 22% in 2023-24.  However, as per the revised estimate, revenue from sales tax/VAT is estimated to be 13% lower than the budget estimate.

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

Taxes

2021-22

Actuals

2022-23

BE

2022-23

RE

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

2023-24

BE

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

State GST

1,118

1,316

1,463

11%

1,785

22%

Sales Tax/ VAT

719

748

649

-13%

792

22%

State Excise

308

350

350

0%

413

18%

Taxes on Vehicles

99

100

123

23%

150

22%

Stamps Duty and Registration Fees

27

38

24

-38%

32

37%

Land Revenue

10

5

5

8%

6

20%

Taxes and Duties on Electricity

2

2

1

-10%

2

43%

GST Compensation Grants

163

50

-

-

-

-

GST Compensation Loans

141

-

-

-

-

-

Note: BE is Budget Estimates; RE is Revised Estimates.
Sources: Detailed Estimates of Receipts, Annual Financial Statement, Meghalaya Budget 2023-24; PRS.
 

Deficits, Debt, and FRBM Targets for 2023-24

The Meghalaya Fiscal Responsibility and Budget Management Act, 2006 provides annual targets to progressively reduce the outstanding liabilities, revenue deficit and fiscal deficit of the state government.

Revenue surplus:  It is the difference between revenue expenditure and revenue receipts.  A revenue surplus implies that the government does not need to borrow money to finance its revenue expenditure (includes salaries, pensions, and grants).  In 2023-24, revenue surplus is estimated to be Rs 2,228 crore (or 4.8 % of the GSDP).  In 2022-23, the state is estimated to observe a revenue surplus of 3.6% of GSDP, significantly higher than the budget estimate of 1.6% of GSDP.  The higher than budgeted revenue surplus in 2022-23 could be on account of higher than budgeted central transfers.  Tax devolution from the Centre is estimated to be 18% higher at the revised estimate stage in 2022-23 as compared to budget estimate, whereas nominal GSDP is expected to be only 1.9% higher at the revised stage.   

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 3.4% of GSDP.  For 2023-24, the central government has permitted a fiscal deficit of up to 3.5% of GSDP to states.  As per the revised estimates of 2022-23, the fiscal deficit of the state is expected to be 4.5% of GSDP which is above the limit of 4% of GSDP prescribed by the central government.  In both 2022-23 and 2023-24, of the prescribed fiscal deficit limit, 0.5% of GSDP is conditional upon certain power sector reforms.

Outstanding liabilities:  Outstanding liabilities is the accumulation of total borrowings at the end of a financial year, it also includes any liabilities on public account.   At the end of 2023-24, Meghalaya’s outstanding liabilities are estimated at 39.9% of GSDP, lower than the revised estimate for 2022-23 (41.7% of GSDP).   The outstanding liabilities have risen as compared to 2019-20 level (31.5% of GSDP). 

Figure 3: Revenue and Fiscal Balance (% 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 2023-24, Meghalaya Budget 2023-24; PRS. 
 

Figure 4: 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 
2023-24, Meghalaya 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.  The state’s total outstanding guarantees are 0.07% of Meghalaya’s GSDP at the end of 2021-22 (Rs 34 crore).

Annexure 1:  Comparison of states’ expenditure on key sectors

The graphs below compare Meghalaya’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 Meghalaya) as per their budget estimates of 2022-23. [1]

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

  • Health: Meghalaya has allocated 8.6% of its expenditure towards health.  This is higher than the average allocation for health by states (6.3%).

  • Rural Development:  Meghalaya has allocated 7.6% of its expenditure to rural development.  This is higher than the average allocation for rural development by states (5.7%)

  • Police:  Meghalaya has allocated 5.7% of its total expenditure towards police, which is higher than the average allocation by states (4.3%).

  • Roads and bridges:  Meghalaya has allocated 7.1% of its total expenditure towards roads and bridges, which is higher than the average allocation for roads and bridges by states (4.5%).

  • Energy:  Meghalaya has allocated 3.4% of its total expenditure towards energy, which is lower than the average expenditure on energy by states (4.8%).

image

image

image

image

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Note: 2021-22, 2022-23 (BE), 2022-23 (RE), and 2023-24 (BE) figures are for Meghalaya.Sources: Annual Financial Statement, Meghalaya 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)

15,262

14,299

-6%

1. Revenue Receipts 

15,232

14,274

-6%

a. Own Tax Revenue

2,579

2,300

-11%

b. Own Non-Tax Revenue

694

525

-24%

c. Share in central taxes

5,105

6,581

29%

d. Grants-in-aid from the Centre

6,854

4,869

-29%

     Of which GST compensation grants

100

163

63%

2. Non-Debt Capital Receipts

30

24

-19%

3. Borrowings

2,248

4,020

79%

      Of which GST compensation loan

0

141

-

Net Expenditure (4+5+6)

16,832

16,457

-2%

4. Revenue Expenditure

13,956

13,620

-2%

5. Capital Outlay

2,817

2,752

-2%

6. Loans and Advances

59

85

44%

7. Debt Repayment

771

2,216

187%

Revenue Surplus

1,275

654

-49%

Revenue Surplus (as % of GSDP)

3.3%

1.7%

-

Fiscal Deficit

1,570

2,159

37%

Fiscal Deficit (as % of GSDP)

4.0%

5.7%

-

Source: Meghalaya 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

Taxes on Vehicles

125

99

-20%

State Excise

360

308

-14%

State GST

1,283

1,118

-13%

Sales Tax/ VAT

767

719

-6%

Stamps Duty and Registration Fees

21

27

27%

Taxes and Duties on Electricity

1.2

1.6

35%

Land Revenue

4.5

9.8

118%

Source: Meghalaya Budget Documents of various years; PRS.

Table  9 : Allocation towards Key Sectors

Sector

2021-22 BE

2021-22 Actuals

% change from BE to Actuals

Social Welfare and Nutrition

791

514

-35%

Rural Development

1,216

875

-28%

Welfare of SC, ST, OBC, and Minorities

145

110

-24%

Water Supply and Sanitation

1,174

924

-21%

Agriculture and Allied Activities

1,100

889

-19%

Education, Sports, Arts, and Culture

2,690

2,390

-11%

Housing

145

132

-9%

Police

1,088

1,004

-8%

Irrigation and Flood Control

169

189

12%

Transport

1,442

1,610

12%

of which Roads and Bridges

1,401

1,594

14%

Health and Family Welfare

1,268

1,682

33%

Urban Development

293

594

103%

Energy

120

689

476%

Source: Meghalaya Budget Documents of various years; PRS.

 

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