Rajasthan Budget Analysis 2022-23

The Chief Minister of Rajasthan, Mr. Ashok Gehlot, presented the Budget for the state for the financial year 2022-23 on February 23, 2022.

Budget Highlights

• The Gross State Domestic Product (GSDP) of Rajasthan for 2022-23 (at current prices) is projected to be Rs 13,34,410 crore.  This is a growth of 11.6% over the revised estimate of GSDP for 2021-22 (Rs 11,96,137 crore)
• Expenditure (excluding debt repayment) in 2022-23 is estimated to be Rs 2,73,468 crore, an 8% increase over the revised estimates of 2021-22.  In addition, debt of Rs 72,715 crore will be repaid by the state
• Receipts (excluding borrowings) for 2022-23 are estimated to be Rs 2,15,256 crore, an increase of 12% as compared to the revised estimate of 2021-22.  In 2021-22, receipts (excluding borrowings) are estimated to exceed the budget estimate by Rs 6,805 crore.
• Revenue deficit for 2022-23 is estimated to be Rs 23,489 crore, which is 1.7% of the GSDP.  In 2021-22, revenue deficit is estimated to be 2.9% of GSDP as against the budget estimate of 1.9% of GSDP.
• Fiscal deficit for 2022-23 is targeted at Rs 58,212 crore (4.4% of GSDP).  In 2021-22, as per the revised estimates, fiscal deficit is expected to be 5.1% of GSDP, higher than the budget estimate of 3.9% of GSDP.

Policy Highlights

• Tax proposals: Tax relief will be provided in the form of: (i) 50% rebate on additional one-time tax on used two-wheelers and cars, (ii) SGST reimbursement to purchasers of e-vehicles and up-front assistance to buyers of two-wheelers and three-wheeler e-vehicles, (iii) reduction in stamp duty from 2.5% to 1% on gift deed in favour of daughters-in-law, and (iv) no stamp duty on gift deed in favour of grandsons and granddaughters by their grandparents.
• Health: Under Chiranjivi scheme, annual medical insurance cover of Rs 10 lakh for each family will be provided.  1,000 new sub-health centres and 15 new hospitals will be constructed.  200 new posts of Food Security Officers will be created, and recruited
• Agriculture: The corpus of Chief Minister’s Krishak Sathi Yojana will be enhanced from Rs 2,000 crore to Rs 5,000 crore.  11 new missions will be launched under the scheme.  These include missions on micro-irrigation, organic farming, seed production and distribution, and food processing among others
• Pension scheme: Rajasthan will shift from the New Pension Scheme (based on contributory pension) to the old pension scheme (based on defined benefits) for all employees who have joined after January 1, 2004.

Rajasthan’s Econom GSDP:  For 2021-22, Rajasthan’s GSDP (at constant prices) is estimated to grow by 11%.     In 2020-21, the GSDP contracted by 2.9% in comparison to 2019-20.  India’s GDP is estimated to grow by 8.9% in 2021-22.   Sectors:   In 2021-22, agriculture, manufacturing, and services sectors contributed 27%, 24%, and 41% to the state’s economy respectively.   In 2020-21, the manufacturing and services sectors contracted by 6% each,   Per capita GSDP:  The per capita GSDP of Rajasthan in 2020-21 (at current prices) was Rs 1,29,460, which is marginally higher than the corresponding figure in 2019-20.   In 2020-21, per capita GDP at the national level was Rs 1,46,087 (at current prices).

Figure  1 : Growth in GSDP and sectors in Rajasthan at constant prices (2011-12)   Sources: Rajasthan Economic Review 2020-21; PRS.

 

 

 

 

 

 

 

 

 

 

Budget Estimates for 2022-23

• Total expenditure (excluding debt repayment) in 2022-23 is targeted at Rs 2,73,468 crore.  This is an increase of 8% over the revised estimate of 2021-22.  This expenditure is proposed to be met through receipts (other than borrowings) of Rs 2,15,256 crore and net borrowings of Rs 1,22,819 crore.  Total receipts for 2022-23 (other than borrowings) are expected to register an increase of 12% over the revised estimate of 2021-22.

• In 2021-22, revenue deficit is estimated to be Rs 35,689 crore at the revised stage as compared to the budget target of Rs 23,750 crore (an increase of 50%).  Revenue deficit in 2022-23 is estimated to be Rs 23,489 crore.   In 2021-22, fiscal deficit is estimated to be 5.14% of GSDP at revised stage against the target of 3.93% of GSDP at the budget stage.  Fiscal deficit for 2022-23 is estimated to be Rs 58,212 crore (4.36% of GSDP).  

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*	2,35,094	2,50,247	3,18,594	27%	3,46,183	9%
(-) Repayment of debt	41,023	17,589	64,769	268%	72,715	12%
Net Expenditure (E)	1,94,071	2,32,658	2,53,826	9%	2,73,468	8%
Total Receipts	2,24,660	2,47,409	3,11,135	26%	3,38,075	9%
(-) Borrowings	89,964	61,904	1,18,825	92%	1,22,819	3%
Net Receipts (R)	1,34,696	1,85,505	1,92,310	4%	2,15,256	12%
Fiscal Deficit (E-R)	59,375	47,153	61,515	30%	58,212	-5%
as % of GSDP	5.86%	3.93%	5.14%		4.36%
Revenue Deficit	44,002	23,750	35,689	50%	23,489	-34%
as % of GSDP	4.34%	1.98%	2.98%		1.76%
Primary Deficit	34,173	18,793	33,260	77%	29,374	-12%
as % of GSDP	3.37%	1.57%	2.78%		2.20%

Note: BE is Budget Estimates; RE is Revised Estimates.  

* There is no appropriation from Contingency Fund in 2022-23.  In 2021-22 (BE) and 2021-22 (RE), an appropriation of Rs 500 crore was made on the Contingency Fund.  These figures have been subtracted from the Total Expenditure, to reflect expenditure from the Consolidated Fund of Rajasthan. 

Sources: Rajasthan Budget Documents 2022-23; Rajasthan Economic Survey 2020; PRS.

Expenditure in 2022-23

Revenue expenditure for 2022-23 is proposed to be Rs 2,38,466 crore, which is an increase of 6% over the revised estimate of 2021-22.  This expenditure includes the payment of salaries, pensions, and interest.   Capital outlay for 2022-23 is proposed to be Rs 34,809 crore, which is an increase of 24% over the revised estimate of 2021-22.

Capital outlay Rajasthan’s capital outlay (expenditure towards creation of assets) for 2022-23 is estimated to be Rs 34,809 crore, which is an increase of 24% over 2021-22.  The highest capital outlay is for water supply and sanitation (Rs 6,724 crore), and irrigation and flood control (Rs 5,965 crore). Capital outlay on health (Rs 3,137 crore) and education (Rs 1,882 crore) is estimated to increase by 49% and 76% respectively.

Table  2 :  Expenditure budget 2020-21 (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	1,78,309	2,08,080	2,25,121	8%	2,38,466	6%
Capital Outlay	15,270	24,216	28,088	16%	34,809	24%
Loans given by the state	491	362	617	70%	193	-69%
Net Expenditure	1,94,071	2,32,658	2,53,826	9%	2,73,468	8%

Sources:  Rajasthan Budget Documents 2022-23 (Annual Financial Statement); 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 2022-23, Rajasthan is estimated to spend Rs 1,19,662 crore on committed expenditure, which is 56% of its revenue receipts.  This is an increase of 6% over the revised estimate of 2021-22.  This comprises spending on salaries (31% of revenue receipts), interest payments (13%), and pension (11%).  In 2022-23, payments towards salaries are estimated to increase by 11% over the revised estimates of 2021-22.

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	51,619	60,293	59,763	-1%	66,385	11%
Pensions	22,440	25,473	25,328	-1%	24,439	4%
Interest Payment	25,202	28,360	28,255	0%	28,838	2%
Total Committed Expenditure	99,260	1,14,127	1,13,346	-1%	1,19,662	6%

Sources: Rajasthan Budget Documents 2022-23; PRS.

Sector-wise expenditure: The sectors listed below account for 70% of the total expenditure on sectors by the state in 2022-23.  

Table  4 : Sector-wise expenditure under Rajasthan 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
Education, Sports, Arts, and Culture	36,191	44,309	44,821	49,627	11%	Rs 12,200 crore has been allocated to Samagra Shiksha Abhiyan. Rs 1,450 crore has been allocated to Mid-Day Meal Program.
Rural Development	11,986	15,920	22,672	28,179	24%	Rs 7,146 crore has been allocated for PM Awas Yojana (Grameen). MNREGS has been allocated Rs 3,937 crore.
Energy	14,856	19,449	24,956	26,750	7%	Rs 21,020 crore has been allocated for power tariff subsidy.
Health and Family Welfare	12,620	16,269	17,078	20,111	18%	Rs 2,228 crore has been allocated to Mukhya Mantri Chiranjeevi Swasthya Bima Yojana Rs 768 crore has been allocated to Mukhya Mantri Nishulk Dawa Yojana.
Social Welfare and Nutrition	11,861	13,542	14,899	15,222	2%	Chief Minister Samman Old Age pension yojana has been allocated Rs 4,205 crore. Pension scheme for widows has been allocated Rs 1,754 crore.
Agriculture and allied activities	12,454	11,808	13,605	13,595	0%	Rs 2,200 crore has been allocated for Pradhan Mantri Fasal Bima Yojana and weather-based crop insurance scheme Rs 1,000 crore has been allocated for agriculture loan waiver scheme
Water Supply and Sanitation	7,330	10,024	10,116	10,897	8%	Rs 1,781 crore has been allocated to the Jal Jeevan Mission
Roads and Bridges	4,469	7,787	8,077	9,267	15%	Rs 1,390 crore has been allocated for Pradhan Mantri Gram Sadak Yojana.
Urban Development	7,466	8,674	11,044	8,728	-21%	Rs 200 crore has been allocated for PMAY (Urban)
Irrigation and Flood Control	4,583	6,184	6,302	8,309	32%	Rs 813 crore has been allocated to Parvan Pariyojana
% of total expenditure on all sectors	64%	66%	69%	70%

Sources: Rajasthan Budget Documents 2022-23; PRS.

Receipts in 2022-23

• Total revenue receipts for 2022-23 are estimated to be Rs 2,14,977 crore, an increase of 13% over the revised estimate of 2021-22.  Of this, Rs 1,20,448 crore (56%) will be raised by the state through its own resources, and Rs 94,529 crore (44%) will come from the centre.  Resources from the centre will be in the form of state’s share in central taxes (23% of revenue receipts) and grants (21% of revenue receipts).
   
• Devolution:  In 2022-23, receipts from the state’s share in central taxes are estimated to increase by 10% over the revised estimate of 2021-22.  In 2021-22, it is expected to increase 12% at the revised estimate stage to Rs 44,791 crore over the budget estimate stage.
• State’s own tax revenue:  Total own tax revenue of Rajasthan is estimated to be Rs 98,294 crore in 2022-23, an increase of 19% over the revised estimate of 2021-22.  This is higher than the growth rate of Rajasthan’s GSDP at 11.6% in 2022-23.   Own tax to GSDP ratio is estimated to increase from 6.88% at the revised estimate stage of 2021-22 to 7.34% in 2022-23.

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	60,283	90,050	82,803	-8%	98,294	19%
State's Own Non-Tax	13,653	17,698	18,547	5%	22,155	19%
Share in Central Taxes	35,576	40,107	44,791	12%	49,211	10%
Grants-in-aid from Centre	24,796	36,475	43,290	19%	5,318	5%
Revenue Receipts	1,34,308	1,84,330	1,89,431	3%	2,14,977	13%
Non-debt Capital Receipts	388	1,175	2,879	145%	279	-90%
Net Receipts	1,34,696	1,85,505	1,92,310	4%	2,15,256	12%

Note: BE is Budget Estimates; RE is Revised Estimates.  

Sources: Rajasthan Budget Documents 2022-23; PRS.

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	20,755	37,663	32,145	-15%	39,500	23%
Sales Tax/ VAT	17,479	22,800	21,000	-8%	25,000	19%
State Excise	9,853	13,250	13,500	2%	15,000	11%
Stamps Duty and Registration Fees	5,297	6,100	6,800	11%	8,100	19%
Taxes on Vehicles	4,368	6,500	5,750	-12%	7,000	22%
Taxes and Duties on Electricity	2,142	2,900	2,500	-14%	2,750	10%
Land Revenue	279	525	622	18%	633	2%
GST Compensation Grants	5,633	-	4,107	-	6,768	65%
GST Compensation Loans	4,604	2,600	7,268	1%	-	-

Sources:  Rajasthan Budget Documents 2021-22 (Annual Financial Statement, Detailed Receipts); PRS

In 2022-23, SGST is estimated to be Rs 39,500 crore, which is the largest source (40%) of Rajasthan’s own tax revenue.  This is an increase of 23% over revised estimate of 2021-22.  Note that the revised estimate of 2021-22 for SGST revenue is expected to be 15% lower than the budget estimate.   Sales tax and VAT is estimated to generate Rs 25,000 crore in 2022-23, an increase of 19% over the revised estimate of 2021-22.  In 2021-22, sales tax and VAT is estimated to be 8% lower than the budget estimates.   In 2022-23, state excise is estimated to generate Rs 15,000 crore which is an increase of 11% over the revised estimate of 2021-22.

GST Compensation grants end 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, Rajasthan has relied on GST compensation grants to achieve the guaranteed SGST revenue level.  In 2021-22, Rajasthan is estimated to receive Rs 6,768 crore in the form of GST compensation grants, which is about 7% of its own tax revenue.  Hence, beyond June 2022, Rajasthan might see a decline in the level of revenue receipts.

 Deficits, Debts and FRBM Targets for 2022-23

The Rajasthan 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 reduces its liabilities.  The budget estimates a revenue deficit of Rs 23,489 crore (or 1.76% of the GSDP) in 2022-23.  Rajasthan has estimated to receive Rs 9,878 crore and Rs 4,862 crore as post-devolution revenue deficit grant from the centre according to the revised estimate of 2021-22 and budget estimate 2022-23, respectively.  The 15^th Finance Commission expects Rajasthan to eliminate revenue deficit by 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 2022-23, the fiscal deficit is estimated to be Rs 58,212 crore (4.36% of GSDP).  This is higher than the 3% limit as per the FRBM Act.  As per the revised estimates, in 2021-22, the fiscal deficit of the state is expected to be 5.14% of GSDP, which is higher than the budget estimate of 3.93%.

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.   In 2022-23, the outstanding liabilities is estimated to be 39.80% of the GSDP, marginally higher than the revised estimate for 2021-22 (39.53% of GSDP).   The outstanding liabilities is estimated to increase from 35.31% in 2019-20 to 39.37% in 2024-25.

Figure  2 : Revenue and Fiscal Deficit (% of GSDP)  Note: RE is Revised Estimates; BE is budget estimates. *Figures for 2023-24 and 2024-25 are projections. Sources: Rajasthan Budget Documents 2022-23; PRS.

Figure  3 : Outstanding Liabilities (% of GSDP) Note: RE is Revised Estimates; BE is budget estimates. *Figures for 2023-24 and 2024-25 are projections. Sources: Rajasthan Budget Documents 2022-23; PRS.

 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 December 31, 2021, the outstanding guarantees extended by the state government were Rs 84,896 crore.  Of this, guarantees worth Rs 72,450 crore (85%) are for the state’s power generation and distribution companies.  Other sectors with significant outstanding guarantees are for Rajasthan State Road Development and Construction Corporation Limited (Rs 3,127 crore) and urban local bodies (Rs 2,582 crore).          

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

• Education:  Rajasthan has allocated 18% of its total expenditure for education in 2022-23.  This is higher than the average allocation (15.2%) for education by all states (2021-22 BE).
• Health:  Rajasthan has allocated 7.4% of its total expenditure on health, which is higher than the average allocation for health by states (6%).
• Agriculture:  The state has allocated 5% of its total expenditure towards agriculture and allied activities.  This is lower than the average allocation for agriculture by states (6.2%).
• Rural development:  Rajasthan has allocated 10.3% of its expenditure on rural development.  This is much higher than the average allocation for rural development by states (5.7%).
• Police:  Rajasthan has allocated 3% of its total expenditure on police, which is lower than the average expenditure on police by states (4.3%).
• Roads and bridges:  Rajasthan has allocated 3.4% of its total expenditure on roads and bridges, which is lower than the average allocation by states (4.7%).

Note: 2020-21, 2021-22 (BE), 2021-22 (RE), and 2022-23 (BE) figures are for Rajasthan.

Sources: Rajasthan Budget in Brief 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)	1,85,505	1,34,696	-27%
1. Revenue Receipts (a+b+c+d)	1,84,330	1,34,308	-27%
a. Own Tax Revenue	90,050	60,283	-33%
b. Own Non-Tax Revenue	17,698	13,653	-23%
c. Share in central taxes	40,107	35,576	-11%
d. Grants-in-aid from the Centre	36,475	24,796	-32%
Of which GST compensation grants	0	5,633
2. Non-Debt Capital Receipts	1,175	388	-67%
3. Borrowings	61,904	89,964	45%
Of which GST compensation loan	2,600	4,604	77%
Net Expenditure (4+5+6)	2,32,658	1,94,071	-17%
4. Revenue Expenditure	2,08,080	1,78,309	-14%
5. Capital Outlay	24,216	15,270	-37%
6. Loans and Advances	2,50,247	2,35,094	-6%
7. Debt Repayment	2,32,658	1,94,071	-17%
Revenue Balance	-23,750	-44,002	85%
Revenue Balance (as % of GSDP)	-1.98%	-4.34%
Fiscal Deficit	-47,153	-59,375	26%

Note: A negative revenue balance indicates a deficit.
Source: Rajasthan 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
SGST	37,663	20,755	-45%
Sales Tax/VAT	22,800	17,479	-23%
State Excise Duty	13,250	9,853	-26%
Stamps Duty and Registration Fees	6,100	5,297	-13%
Taxes on Vehicles	6,500	4,368	-33%
Taxes and Duties on Electricity	2,900	2,142	-26%

Source: Rajasthan 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
Housing	167	93	-44%
Roads and Bridges	7,787	4,469	-43%
Water Supply and Sanitation	10,024	7,330	-27%
Irrigation and Flood Control	6,184	4,583	-26%
Rural Development	15,920	11,986	-25%
Energy	19,449	14,856	-24%
Health and Family Welfare	16,269	12,620	-22%
Education, Sports, Arts, and Culture	44,309	36,191	-18%
Welfare of SC, ST, OBC, and Minorities	2,190	1,805	-18%
Urban Development	8,674	7,466	-14%
Police	7,384	6,448	-13%
Social Welfare and Nutrition	13,542	11,861	-12%
Agriculture and allied activities	11,808	12,454	5%

Source: Rajasthan Budget Documents of various years; PRS.