By Rohit and Jhalak Some Rajya Sabha seats will be contested over the next year.  The Presidential elections are also scheduled to be held in 2012.  The recent assembly elections has implications for both these elections.  The Presidential elections will depend on the strenght in the assemblies, in Lok Sabha and in Rajya Sabha (which could change over the next year).  Implications for Rajya Sabha Elections The composition of Rajya Sabha may undergo some changes.  A total of 12 Rajya Sabha seats are up for election in 2011.  This includes 6 seats from West Bengal, 3 from Gujarat and 1 each from Maharashtra, Tamil Nadu and Goa.  Another 65 seats, across 18 states, go for elections in early 2012.  The largest chunk of these seats comes from UP(10), followed by Andhra Pradesh(6), Bihar(6) and Maharashtra(6). Since Rajya Sabha members are elected by the elected members of the Legislative Assembly of the State, a change in the composition of the assembly can affect the election outcome.  We used the current assembly compositions to work out scenarios for Rajya Sabha in 2011 and 2012.  There could be alliances between parties for the Rajya Sabha elections, so we have estimated a range for each grouping (Scenario I and II) for 2012.  See Notes [1] and [2]. 

Parties/ Coalitions 2010 Scenario 2011 Scenario 2012
      I II
UPA 89 94 95 97
NDA 65 65 67 66
Left 22 19 14 14
BSP 18 18 19 19
SP 5 5 6 6
AIADMK 4 5 5 5
BJD 6 6 5 5
Other parties 18 18 20 19
Independent 6 6 5 5
Nominated 8 9 9 9
Total 241 245 245 245

Implications for the election of the President The President is elected in accordance with the provisions of Article 54 and 55 of the Constitution.  The electorate consists of the elected members of Lok Sabha, Rajya Sabha and all Legislative Assemblies.  Each MP/ MLA's vote has a pre-determined value based on the population they represent.  The election is held in accordance with the system of proportional representation by means of a single transferable vote.  The winning candidate must secure at least 50% of the total value of votes polled. (For details, refer to this Election Commission document).  There is no change in the Lok Sabha composition (unless there are bye-elections). Position in Legislative Assemblies After the recent round of assembly elections, the all-India MLA count adds up to:

UPA 1613
NDA 1106
Left 205
BSP 246
BJD 103
SP 95
Others 597

The above numbers can now be used to estimate the value of votes polled by each coalition. See Note [3]:

Value of votes cast Scenario - 1 Scenario - 2
UPA 439,437 440,853
NDA 307,737 307,029
Left 51,646 51,646
BSP 77,243 77,243
SP 38,531 38,531
AIADMK 36,392 36,392
BJD 28,799 28,799
Others 119,097 118,389
Total 1,098,882 1,098,882
Min. to be elected 549,442 549,442

The UPA has the highest value of votes polled but the figure is not sufficient to get its candidate elected.  Assuming that there are at most three candidates with significant support (UPA, NDA, and Left/Third Front), the winner will be the one who manages to bridge the gap with second preference votes.  On this factor, the UPA backed candidate is likely to hold the edge over others.  Notes: [1] At present, there are four vacant seats in Rajya Sabha (1 Maharashtra, 1 TN, 1 WB and 1 Nominated).  It is assumed that all these seats are filled up in 2011. [2] Three of the 11 nominated members in the current Rajya Sabha have declared their party affiliation as INC.  These have been included in the UPA count in the above analysis.  For the sake of simplicity, it is assumed that members who get nominated in 2011/ 12 are not aligned to any party/ coalition. [3] The above analysis is based on the assumption that the next set of assembly elections happen after the Presidential election.

Early this week, the Comptroller and Auditor General (CAG) of India tabled a report on the finances of Uttar Pradesh for the financial year 2020-21.  A few days prior to that, on May 26, the budget for Uttar Pradesh for 2022-23 was presented, along with which the final audited expenditure and receipt figures for the year 2020-21 were released.  The year 2020-21 presented a two-fold challenge for states – loss in revenue due to impact of COVID-19 pandemic and lockdown, and the need for increased expenditure to support affected persons and economic recovery.  CAG noted that Uttar Pradesh’s GSDP grew by 1.05% in 2020-21 as compared to a growth of 6.5% in 2019-20.  The state reported a revenue deficit of Rs 2,367 crore in 2020-21 after reporting revenue surplus for 14 successive years since 2006-07.  Revenue deficit is the excess of revenue expenditure over revenue receipts.  This blog looks at the key trends in the finances of Uttar Pradesh in 2020-21 and certain observations by CAG on fiscal management by the state.

Spending and Deficits in 2020-21

Underspending:  In 2020-21, total spending by the state was 26% less than the budget estimate presented in February 2020.  In sectors such as water supply and sanitation, the actual expenditure was 60% less than the amount budgeted, while in agriculture and allied activities only 53% of the budgeted amount was spent.  CAG observed that in 251 schemes across 57 departments, the state government did not incur any expenditure in 2020-21.  These schemes had a budget provision of at least one crore rupees, and had cumulative allocation of Rs 50,617 crore.  These included schemes such as Pipe Drinking Water Scheme in Bundelkhand/Vindhya and apportionment of pension liabilities.  Moreover, the overall savings due to non-utilisation of funds in 2020-21 was 27.28% of total budget provisions.  CAG observed that the budgetary provisions increased between 2016 and 2021.  However, the utilisation of budget provisions reduced between 2018-19 and 2020-21.

Pattern of spending: CAG observed that in case of 12 departments, more than 50% of the expenditure was incurred in March 2021, the last month of the financial year.  In the civil aviation department, 89% of the total expenditure was incurred in March while this figure was 62% for the social welfare department (welfare of handicapped and backward classes).  CAG noted that maintaining a steady pace of expenditure is a sound practice under public financial management.  However, the Uttar Pradesh Budget Manual has no specific instructions for preventing such bunching of expenditure.  The CAG recommended that the state government can consider issuing guidelines to control the rush of expenditure towards the closing months of the financial year.

Management of deficit and debt: As a measure to mitigate the impact of COVID-19, an Ordinance was promulgated in June 2020 to raise the fiscal deficit limit from 3% of GSDP to 5% of GSDP for the year 2020-21.   Fiscal deficit represents the gap between expenditure and receipts in a year, and this gap is filled with borrowings.   The Uttar Pradesh Fiscal Responsibility and Budget Management Act, 2004 (FRBM Act) passed by Uttar Pradesh Assembly specifies the upper limit for debt and deficits.  The Ordinance thus permitted the state government to borrow more to sustain its budget expenditure.  The fiscal deficit of the state in 2020-21 was 3.20% of GSDP, well below the revised limit. At the same time, the state’s outstanding debt to GSDP in 2020-21 was 32.77% of GSDP, above the target of 32% of GSDP set under the FRBM Act.  Outstanding debt represents accumulation of debt over the years.  

Table 1: Spending by Uttar Pradesh in 2020-21 as compared to Budget Estimates (in Rs crore)


2020-21 BE

2020-21 Actuals

% change from BE to Actuals

Net Receipts (1+2)




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




a. Own Tax Revenue




b. Own Non-Tax Revenue




c. Share in central taxes




d. Grants-in-aid from the Centre




Of which GST compensation grants




2. Non-Debt Capital Receipts




3. Borrowings




Of which GST compensation loan




Net Expenditure (4+5+6)




4. Revenue Expenditure




5. Capital Outlay




6. Loans and Advances




7. Debt Repayment




Revenue Balance




Revenue Balance (as % of GSDP)




Fiscal Deficit




Fiscal Deficit (as % of GSDP)




Note: A negative revenue balance indicates a deficit.  The actual fiscal deficit reported by Uttar Pradesh for 2020-21 in 2022-23 budget was 2.8% of GSDP.  This difference was due to higher GSDP figure reported by the state.  
Sources: Uttar Pradesh Budget Documents of various years; CAG; PRS.

Finances of State Public Sector Undertakings

Public sector undertakings (PSUs) are set up by the government to discharge commercial activities in various sectors.  As on March 31, 2021, there were 115 PSUs in Uttar Pradesh.  CAG analysed the performance of 38 PSUs.   Out of these 38 PSUs, 22 companies earned a profit of Rs 700 crore, while 16 companies posted a loss of Rs 7,411 crore in 2020-21.  Note that both the number of PSUs incurring losses and the quantum of losses has decreased since 2018-19.  In 2018-19, 20 PSUs had reported losses worth Rs 15,219 crore.  

Figure 1: Cumulative losses incurred by Uttar Pradesh PSUs (Rs crore)
 Sources: CAG; PRS.

Losses of power sector PSUs: Three power sector PSUs—Uttar Pradesh Power Corporation Limited, Purvanchal Vidyut Vitran Nigam Limited, and Paschimanchal Vidyut Vitran Nigam Limited—were the top loss incurring PSUs.  These three PSUs accounted for 73% of the total losses of Rs 7,411 crore mentioned above.   Note that as of June 2022, for each unit of power supplied, the revenue realised by UP power distribution companies (discoms) is 27 paise less than cost of supply.  This is better than the gap of 34 paise per unit at the national level.   However, the aggregate technical and commercial losses (AT&C) of the Uttar Pradesh discoms was 27.85%, considerably higher than the national average of 17.19%.  AT&C losses refer to the proportion of power supplied by a discom for which it does not receive any payment.

Off-budget borrowings: CAG also observed that the Uttar Pradesh government resorted to off-budget borrowing through state owned PSUs/authorities.  Off budget borrowings are not accounted in the debt of the state government and are on books of the respective PSUs/authorities, although, debt is serviced by the state government.  As a result, the outstanding debt reported in the budget does not represent the actual debt position of the state.  CAG identified off-budget borrowing worth Rs 1,637 crore.  The CAG recommended that the state government should avoid extra-budget borrowings.  It should also credit all the loans taken by PSUs/authorities on behalf of and serviced by the state government to state government accounts.

Management of Reserve Funds

The Reserve Bank of India manages two reserve funds on the behalf of state governments.   These funds are created to meet the liabilities of state governments.  These funds are: (i) Consolidated Sinking Fund (CSF), and (ii) Guarantee Redemption Fund (GRF).  They are funded by the contributions made by the state governments.  CSF is an amortisation fund which is utilised to meet the repayment obligations of the government.  Amortisation refers to payment of debt through regular instalments.  The interest accumulated in the fund is used for repayment of outstanding liabilities (which is the accumulation of total borrowings at the end of a financial year, including any liabilities on the public account).  

In line with the recommendation of the 12th Finance Commission, Uttar Pradesh created its CSF in March 2020.  The state government may transfer at least 0.5% of its outstanding liabilities at the end of the previous year to the CSF.  CAG observed that in 2020-21, Uttar Pradesh appropriated only Rs 1,000 crore to the CSF against the requirement of Rs 2,454 crore.  CAG recommended that the state government should ensure at least 0.5% of the outstanding liabilities are contributed towards the CSF every year.

GRF is constituted by states to meet obligations related to guarantees.  The state government may extend guarantee on loans taken by its PSUs.  Guarantees are contingent liabilities of the state government, as in case of default by the company, repayment burden will fall on the state government.  GRF can be used to settle guarantees extended by the government with respect to borrowings of state PSUs and other bodies.  The 12th Finance Commission had recommended that states should constitute GRF.  It was to be funded through guarantees fees to meet any sudden discharge of obligated guarantees extended by the states.  CAG noted that Uttar Pradesh government has not constituted GRF.  Moreover, the state has also not fixed any limits for extending guarantees.  

For an analysis of Uttar Pradesh’s 2022-23 budget, please see here.