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The Finance Minister of Uttarakhand, Mr. Prem Chand Aggarwal, presented the Budget for the state for the financial year 2023-24 on March 15, 2023.

Budget Highlights

  • The Gross State Domestic Product (GSDP) of Uttarakhand for 2023-24 (at current prices) is projected to be Rs 3.33 lakh crore, amounting to growth of 10% over 2022-23.

  • Expenditure (excluding debt repayment) in 2023-24 is estimated to be Rs 66,179 crore, an increase of 10% over the revised estimates of 2022-23.  In addition, debt of Rs 11,228 crore will be repaid by the state.

  • Receipts (excluding borrowings) for 2023-24 are estimated to be Rs 57,133 crore, an increase of 9.7% as compared to the revised estimate of 2022-23.  In 2022-23, receipts (excluding borrowings) are estimated to exceed the budget estimate by Rs 568 crore (increase of 1%).

  • Revenue surplus in 2023-24 is estimated to be 1.3% of GSDP (Rs 4,310 crore), higher than the revised estimates for 2022-23 (0.8% of GSDP).

  • Fiscal deficit for 2023-24 is targeted at 2.7% of GSDP (Rs 9,047 crore).   In 2022-23, as per the revised estimates, fiscal deficit is expected to be 2.7% of GSDP.

Policy Highlights

  • Empowered Uttarakhand: The goal of creating an empowered Uttarakhand by 2025 will be achieved by focusing on seven areas, including investment in human capital, improving access to health infrastructure, and balancing ecology and the economy.

  • Horticulture: Over the next three years, 50,000 polyhouses (a type of greenhouse) will be set up to promote cluster-based horticulture.  Six ‘aroma valleys’ will also be developed, such as the Cinnamon Valley in Nainital and Mint Valley in Haridwar.

  • Joshimath Reconstruction: Rs 1,000 crore has been allocated towards the reconstruction of subsidence-hit towns, such as Joshimath.

Uttarakhand’s Economy

  • GSDP:  In 2022-23, Uttarakhand’s GSDP (at constant prices) is estimated to grow at 7%.  In 2021-22, GSDP grew at 8.2%.  In comparison, national GDP is estimated to grow at 8.7% in 2021-22.

  • Sectors:  In 2022-23, agriculture, manufacturing, and services sectors are estimated to contribute 11%, 49%, and 40% of the economy, respectively (at current prices).

  • Per capita GSDP:  The per capita GSDP of Uttarakhand in 2022-23 (at current prices) is estimated at Rs 2,61,173, an annualised increase of 5% over the per capital GSDP in 2018-19 (Rs 2,07,714).

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

 image

Note: These numbers are as per constant prices (2011-12) which implies that the growth rate is adjusted for inflation.
Sources: Uttarakhand Economic Review 2022; PRS.

Budget Estimates for 2023-24

  • Total expenditure (excluding debt repayment) in 2023-24 is targeted at Rs 66,179 crore.  This is an increase of 10% over the revised estimate of 2022-23.   This expenditure is proposed to be met through receipts (excluding borrowings) of Rs 57,133 crore, and net borrowings of Rs 8,232 crore.  Total receipts for 2023-24 (other than borrowings) are expected to register an increase of 9.7% over the revised estimate of 2022-23.
  • Revenue surplus in 2023-24 is estimated to be 1.3% of GSDP (Rs 4,310 crore), higher than the revised estimates for 2022-23 (0.8% of GSDP).
  • Fiscal deficit for 2023-24 is targeted at 2.7% of GSDP, same as the revised estimates for 2022-23.  However, in absolute terms, fiscal deficit in 2023-24 (Rs 9,047 crore) is estimated to be 12% higher than the revised estimates for 2022-23 (Rs 8,108 crore).

Table  1 : Budget 2023-24 - Key figures (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

Total Expenditure

50,640

65,571

67,754

3.3%

77,407

14.2%

(-) Repayment of debt

3,830

5,568

7,578

36.1%

11,228

48.2%

Net Expenditure (E)

46,810

60,003

60,175

0.3%

66,179

10.0%

Total Receipts

50,992

63,775

67,287

5.5%

76,593

13.8%

(-) Borrowings

7,918

12,275

15,219

24.0%

19,460

27.9%

Net Receipts (R)

43,074

51,500

52,068

1.1%

57,133

9.7%

Fiscal Deficit (E-R)

3,736

8,504

8,108

-4.7%

9,047

11.6%

as % of GSDP

1.4%

2.8%

2.7%

 

2.7%

 

Revenue Surplus

4,128

2,461

2,451

-0.4%

4,310

75.9%

as % of GSDP

1.5%

0.8%

0.8%

 

1.3%

 

Primary Deficit

-1,203

2,486

2,090

-15.9%

2,886

38.1%

as % of GSDP

-0.4%

0.8%

0.7%

 

0.9%

 

Note: BE is Budget Estimates; RE is Revised Estimates.
Sources: Budget at a Glance, Uttarakhand Budget 2023-24; PRS.

Expenditure in 2023-24

  • Revenue expenditure for 2023-24 is proposed to be Rs 52,748 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 13,134 crore, an increase of 25% over the revised estimate of 2022-23.  Capital outlay indicates the expenditure towards creation of assets.

Loans given by the state

In 2023-24, the state government is estimated to give Rs 298 crore as loans to institutions in sectors such as agriculture, housing, urban development, and transport.  This is a 172% increase over the revised estimates of 2022-23 (Rs 110 crore).  Between 2016-17 and 2020-21, the state government has given, on average, loans worth Rs 168 crore every year.  However, only Rs 27 crore has been recovered yearly.

The CAG (2022) noted that four sectors had not repayed any amount between 2016-17 and 2020-21.  This includes the agriculture and allied sectors, which had outstanding loans of Rs 1,117 crore, and the Special Area Programme, which had outstanding loans of Rs 503 crore.

Table  2 :  Expenditure budget 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

Revenue Expenditure

38,929

49,013

49,594

1%

52,748

6%

Capital Outlay

7,533

10,840

10,471

-3%

13,134

25%

Loans given by the state

347

150

110

-27%

298

172%

Net Expenditure

46,810

60,003

60,175

0%

66,179

10%

Sources:  Annual Financial Statement, Uttarakhand 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, Uttarakhand is estimated to spend Rs 32,583 crore on committed expenditure, which is 57% of its estimated revenue receipts.  This comprises spending on salaries (33% of revenue receipts), pension (13%), and interest payments (11%).

In 2023-24, committed expenditure is expected to increase by 8% over the revised estimate of 2022-23.   In 2022-23, expenditure towards pension is estimated to be 3% higher than the budget estimate, while salaries and interest payments are estimated to be the same.  In 2021-22, actual committed expenditure was 60% of revenue receipts.  The state’s committed expenditure is projected to grow from Rs 32,583 crore in 2023-24 to Rs 42,258 crore in 2026-27, growing at an annualised rate of 9%.  Expenditure on interest is projected to grow at an annualised rate of 10%, salaries at 9% and pension at 7%. 

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

14,511

17,350

17,346

0%

18,820

8%

Pensions

6,364

6,703

6,933

3%

7,602

10%

Interest Payment

4,939

6,018

6,018

0%

6,161

2%

Total Committed Expenditure

25,815

30,071

30,297

1%

32,583

8%

Sources: Budget at a Glance and Annual Financial Statement, Uttarakhand 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 Uttarakhand’s expenditure on key sectors with that by other states is shown in Annexure 1.

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

Sectors

2021-22 Actuals

2022-23

BE

2022-23

RE

2023-24

BE

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

Budget Provisions

Education, Sports, Arts, and Culture

8,694

10,896

10,541

10,907

3%

Rs 3,300 crore has been allocated for government primary schools.

Agriculture and Allied Activities

3,612

4,059

3,820

5,037

32%

Rs 296 crore has been allocated towards Agriculture Research and Education. 

Rural Development

3,378

4,922

4,883

4,845

-1%

Pradhan Mantri Gram Sadak Yojana has been allocated Rs 1,000 crore. 

Social Welfare and Nutrition

3,188

4,572

4,667

4,558

-2%

Rs 608 crore has been allocated towards women’s welfare. 

Health and Family Welfare

3,020

4,416

4,793

4,435

-7%

Rs 1,418 crore has been allocated towards rural health services and Rs 1,101 crore towards urban health services.

Transport

1,988

2,184

2,475

2,708

9%

Rs 1,408 crore has been allocated for capital outlay on roads and bridges. 

Police

2,001

2,333

2,312

2,447

6%

Rs 1,386 crore has been allocated towards district police.

Irrigation and Flood Control

721

1,365

1,020

1,507

48%

Major irrigation projects have been allocated Rs 947 crore, including Rs 110 crore for construction of Song Dam.  

Water Supply and Sanitation

1,530

1,279

1,366

1,283

-6%

Rs 627 crore has been allocated for rural water supply and Rs 431 crore for urban water supply. 

Urban Development

487

886

936

1,258

34%

Rs 1,125 crore has been allocated towards integrated development of small and medium towns. 

% of total expenditure on all sectors

62%

62%

61%

59%

-3%

 

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

Receipts in 2023-24

  • Total revenue receipts for 2023-24 are estimated to be Rs 57,057 crore, an increase of 10% over the revised estimate of 2022-23.  Of this, Rs 24,744 crore (43%) will be raised by the state through its own resources, and Rs 32,313 crore (57%) will come from the centre.  Resources from the centre will be in the form of state’s share in central taxes (20% of revenue receipts) and grants (37% of revenue receipts).

  • Central transfers:  In 2023-24, state’s share in central taxes is estimated at Rs 11,420 crore, an increase of 8% over the revised estimate of 2022-23.  Grants from the centre in 2023-24 are estimated at Rs 20,893 crore, an increase of 7% over the revised estimates for 2022-23.

  • State’s own tax revenue:  Uttarakhand’s own tax revenue is estimated to be Rs 19,983 crore in 2023-24, an increase of 18% over the revised estimate of 2022-23.  Own tax revenue as a percentage of GSDP is estimated at 6% in 2023-24.  For 2022-23, the state had estimated this ratio at 5.1%, however, as per revised estimates, it is expected to be higher (5.6%).   In 2022-23, states on average estimated their own tax-to-GSDP ratio to be 6.7%.

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

14,176

15,371

16,952

10%

19,983

18%

State's Own Non-Tax

2,756

5,521

4,977

-10%

4,762

-4%

Share in Central Taxes

9,906

9,130

10,568

16%

11,420

8%

Grants-in-aid from Centre

16,219

21,453

19,548

-9%

20,893

7%

Revenue Receipts

43,057

51,474

52,045

1%

57,057

10%

Non-debt Capital Receipts

17

25

23

-9%

75

228%

Net Receipts

43,074

51,500

52,068

1%

57,133

10%

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

  • In 2023-24, State GST is estimated to be the largest source of own tax revenue (44% share).  State GST revenue is estimated to increase by 19% over the revised estimates of 2022-23.   In 2022-23, the receipt on this account is expected to be 19% higher than budgeted.

  • Revenue from taxes and duties on electricity are expected to increase by 42% in 2023-24 as compared to the revised estimates of 2022-23.  In 2023-24, revenue from the Water Cess is expected to increase by 355% over the revised estimates of 2022-23 (from Rs 110 crore to Rs 500 crore).   In 2021-22, actual revenue from this cess was only Rs 2 crore, while the budget estimated Rs 110 crore.

  • Between the budget and revised estimates for 2022-23, state GST is estimated to increase by 19% while land revenue is estimated to decrease by 45%.  Improper estimation can affect planned expenditure.  Expenditure on almost all major sectors declined between the between the budget estimates and actuals of 2021-22.  The CAG (2022) recommended that the state government should be more realistic in its budgetary estimates, and ensure sufficient control mechanisms to prevent excess/inadequate expenditure.

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

5,973

6,201

7,396

19%

8,788

19%

State Excise

3,258

3,522

3,605

2%

3,950

10%

Sales Tax/ VAT

2,302

2,204

2,353

7%

2,603

11%

Stamps Duty and Registration Fees

1,488

1,590

1,849

16%

2,063

12%

Taxes on Vehicles

889

1,155

1,300

13%

1,475

13%

Land Revenue

224

550

300

-45%

550

83%

Taxes and Duties on Electricity

40

38

38

0%

54

42%

GST Compensation Grants

1,475

2,590

2,590

0%

0

-

GST Compensation Loans

3,333

0

0

 

0

 

Sources: Annual Financial Statement, Revenue Budget, and Budget at a Glance statements, Uttarakhand Budget 2023-24; PRS.

Deficits, Debt, and FRBM Targets for 2023-24

The Uttarakhand Fiscal Responsibility and Budget Management Act, 2005 provides annual targets to progressively reduce the outstanding liabilities, revenue deficit and fiscal deficit of the state government.

Revenue surplus:  It is the difference of revenue expenditure and revenue receipts.   A revenue surplus implies that revenue is more than the government’s recurring expenses, which do not increase its assets or reduce its liabilities.  The budget estimates a revenue surplus of Rs 4,310 crore (or 1.3% of the GSDP) in 2023-24.  Similarly, in 2022-23, the revenue surplus is expected to be Rs 2,451 crore (0.8% of GSDP) as per revised estimates.  Revenue surplus is projected to decrease to 0.91% of GSDP by 2026-27.

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 2.7% 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, which is marginally lower than the budget estimate of 2.8% of GSDP.  Fiscal deficit is projected to grow in the next years, reaching 2.99% of GSDP in 2026-27.

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, the outstanding liabilities are estimated to be 28.2% of GSDP, marginally higher than the revised estimate for 2022-23 (28.1% of GSDP).  The outstanding liabilities projected to increase in the future, and is estimated to reach 29% of GSDP in 2026-27.

Figure  3 : Revenue and Fiscal Balance (% of GSDP) 

image

Note: *Figures from 2024-25 to 2026-27 are projections.  RE is Revised Estimates; BE is budget estimates.
Sources: Medium Term Fiscal Policy, Uttarakhand Budget 2023-24; PRS.

Figure  4 : Outstanding Liabilities (% of GSDP)

image

Note: *Figures from 2024-25 to 2026-27 are projections; Above figures do not include GST compensation loan as liabilities as it is to be serviced by the central government.  RE: Revised Estimates; BE: Budget Estimates.
Sources: Medium Term Fiscal PolicyUttarakhand 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.  Outstanding guarantees of the state government of Uttarakhand reduced from Rs 374 crore at the beginning of 2022-23 to Rs 117 crore at the end of the year.

Annexure 1:  Comparison of states’ expenditure on key sectors

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

  • Education: Uttarakhand 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:  Uttarakhand has allocated 6.7% of its total expenditure towards health, which is higher than the average allocation for health by states (6.3%).

  • Agriculture:  Uttarakhand has allocated 7.6% of its expenditure on agriculture.  This is higher than the average allocation for agriculture by states (5.8%).

  • Water Supply and Sanitation:  Uttarakhand has allocated 1.9% of its expenditure towards water supply and sanitation.  This is lower than the average allocation towards this sector by states (3%).

  • Energy:  Uttarakhand has allocated 1.8% of its total expenditure towards energy, which is lower than the average expenditure on energy by states (4.8%).

  • Housing:  Uttarakhand has allocated less than 0.5% of its total expenditure towards housing, which is significantly lower than the average allocation by states (1.8%).

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

44,174

43,074

-2%

1.  Revenue Receipts (a+b+c+d)

44,151

43,057

-2%

a.  Own Tax Revenue

12,754

14,176

11%

b.  Own Non-Tax Revenue

3,294

2,756

-16%

c.  Share in central taxes

7,441

9,906

33%

d.  Grants-in-aid from the Centre

20,662

16,219

-22%

     Of which GST compensation grants

2,300

1,475

-36%

2.  Non-Debt Capital Receipts

23

17

-26%

3.  Borrowings

12,850

7,918

-38%

      Of which GST compensation loan

0

3,333

-

Net Expenditure (4+5+6)

53,159

46,810

-12%

4.  Revenue Expenditure

44,036

38,929

-12%

5.  Capital Outlay

8,973

7,533

-16%

6.  Loans and Advances

150

347

132%

7.  Debt Repayment

4,242

3,830

-10%

Revenue Balance

115

4,128

3492%

Revenue Balance (as % of GSDP)*

0.04%

1.5%

-

Fiscal Deficit

8,985

3,736

-58%

Fiscal Deficit (as % of GSDP)

3.1%

1.4%

-

Note: *A negative revenue sign indicates a deficit, positive sign indicates a surplus.  BE: Budget Estimates.
Source: Uttarakhand Budget Documents of various years; PRS.

Table  8 : Key Components of State's Own Tax Revenue (in Rs crore)

Tax Head

2021-22 BE

2021-22 Actuals

% change from BE to Actuals

Land Revenue

500

224

-55%

Taxes on Vehicles

1,050

889

-15%

State Excise

3,202

3,258

2%

Sales Tax/ VAT

2,004

2,302

15%

Stamps Duty and Registration Fees

1,200

1,488

24%

State GST

4,671

5,973

28%

Taxes and Duties on Electricity

17

40

139%

Source: Uttarakhand Budget Documents of various years; PRS.

Table  9 : Allocation towards Key Sectors (in Rs crore)

Sector

2021-22 BE

2021-22 Actuals

% change from BE to Actuals

Energy

260

115

-56%

Welfare of SC, ST, OBC, and Minorities

537

240

-55%

Urban Development

1,000

487

-51%

Irrigation and Flood Control

1,354

721

-47%

Housing

119

81

-31%

Water Supply and Sanitation

1,893

1,530

-19%

Transport

2,390

1,988

-17%

of which Roads and Bridges

1,917

1,782

-7%

Health and Family Welfare

3,439

3,020

-12%

Education, Sports, Arts, and Culture

9,744

8,694

-11%

Police

2,220

2,001

-10%

Social Welfare and Nutrition

3,406

3,188

-6%

Rural Development

3,439

3,378

-2%

Agriculture and Allied Activities

3,545

3,612

2%

Source: Uttarakhand Budget Documents of various years; PRS.

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