Rajasthan Budget Analysis 2023-2024 | RPSC Preparation: All subjects - RPSC RAS (Rajasthan) PDF Download

Key Points of Rajasthan Budget Analysis 2023-24

• Presenter: The Budget for the state of Rajasthan for the financial year 2023-24 was presented by the Chief Minister, Mr. Ashok Gehlot, on February 10, 2023.

Budget Highlights

• Gross State Domestic Product (GSDP): Projected at Rs. 15.7 lakh crore, reflecting an 11.5% growth over 2022-23.
• Expenditure: Estimated at Rs. 2,97,091 crore, which is a 7.1% increase over the revised estimates of 2022-23. Additionally, Rs. 93,766 crore will be allocated for debt repayment.
• Receipts: Estimated at Rs. 2,34,319 crore, marking an 8.4% increase compared to the revised estimates of 2022-23. In 2022-23, receipts (excluding borrowings) are projected to increase by 0.4% over the budget estimates.
• Revenue Deficit: Expected to be 1.6% of GSDP (Rs. 24,896 crore), down from the revised estimate of 2.3% for 2022-23. The revenue deficit for 2022-23 is anticipated to be 2.3%, higher than the budget estimate of 1.8%.
• Fiscal Deficit: Targeted at 4.0% of GSDP (Rs. 62,772 crore) for 2023-24. For 2022-23, the fiscal deficit is expected to be 4.3% of GSDP, which is slightly lower than the budget estimate of 4.4%.

Policy Highlights

• Gig Workers Welfare Act: A new Act will be introduced to establish the Gig Workers Welfare Board and the Gig Workers Welfare and Development Fund, which will receive an allocation of Rs. 200 crore.
• Power: Under the Chief Minister’s Free Electricity Scheme, the provision of free electricity will be increased from 50 units to 100 units for consumers.
• Social Welfare: Beneficiaries of the National Food Security Act, 2013 will receive free rations, including the Chief Minister’s Annapurna Food Packet, which contains rice, sugar, and oil.
• Education and Skill Development: A Youth Policy will be created to establish the Youth Development and Welfare Fund, aimed at supporting education, skill development, and employment opportunities.

Rajasthan’s Economy

• GSDP Growth: In 2022-23, Rajasthan’s Gross State Domestic Product (GSDP) at constant prices is projected to grow by 8.2% compared to the previous year. For 2021-22, the GSDP growth was estimated at 11.4%. In comparison, the national GDP is expected to grow by 7.0% in 2022-23, down from 8.7% in 2021-22.
• Sectoral Growth: All three major sectors—agriculture, manufacturing, and services—experienced growth in 2022-23. The services sector achieved the highest growth rate at 10.7%. In 2022-23, the contributions of agriculture, manufacturing, and services to the economy are estimated to be 60%, 15%, and 24%, respectively, at current prices.
• Per Capita Income: The per capita income of Rajasthan in 2022-23 is anticipated to increase by 15% compared to the previous year, based on current prices.

Budget Estimates for 2023-24

• Total Expenditure: Targeted at Rs. 2,97,091 crore (excluding debt repayment), marking a 7.1% increase from the revised estimate of 2022-23. This will be financed through receipts (excluding borrowings) of Rs. 2,34,319 crore and net borrowings of Rs. 54,589 crore. Total receipts for 2023-24 are expected to rise by 8.4% over the revised estimate for 2022-23.
• Revenue Deficit: Projected at 1.6% of GSDP (Rs. 24,896 crore), which is an improvement from the revised estimate of 2.3% of GSDP for 2022-23.
• Fiscal Deficit: Targeted at 4% of GSDP (Rs. 62,772 crore) for 2023-24, down from the revised estimate of 4.3% of GSDP for 2022-23. The central government has set a fiscal deficit ceiling of 3.5% of GSDP for states, including an additional 0.5% for power sector reforms.
• 2022-23 Adjustments: The fiscal deficit for 2022-23 is higher in absolute terms compared to budget estimates but lower by about 0.1 percentage point relative to GSDP, due to a 6% increase in GSDP from budget to revised estimates. Expenditure has increased by 1.5% over the 2022-23 budget estimates, while receipts are expected to rise by 0.4% of GSDP over the budget estimates.

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

Expenditure in 2023-24

• Revenue Expenditure: Proposed at Rs. 2,58,884 crore, which is a 4% increase over the revised estimate for 2022-23. This expenditure covers salaries, pensions, interest, grants, and subsidies.
  
• Capital Outlay: Proposed at Rs. 38,061 crore, marking a 31% increase from the revised estimate of 2022-23. This reflects spending aimed at asset creation.
• Loans and Advances: Expected to total Rs. 146 crore, representing a decrease of Rs. 53 crore (27%) from the budget estimates.

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

Committed Expenditure Overview: Committed expenditure refers to the portion of a state's budget allocated to mandatory payments such as salaries, pensions, and interest. High committed expenditure limits the state's flexibility to allocate funds for other priorities like capital investment. For 2023-24, Rajasthan is projected to allocate Rs. 1,29,963 crore to committed expenditure, which constitutes 56% of its estimated revenue receipts. This includes spending on salaries (31% of revenue receipts), pensions (11%), and interest payments (14%). Committed expenditure is expected to rise by 7% compared to the revised estimate for 2022-23. In 2022-23, spending on salaries is anticipated to be 2% lower than initially budgeted.

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

Sector-Wise Expenditure Overview: In 2023-24, the following sectors together account for 69% of the total sector-wise expenditure by the state. For a comparative analysis of Rajasthan’s expenditure on these key sectors relative to other states, please refer to Annexure 1.

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

Receipts in 2023-24

• Total Revenue Receipts: For 2023-24, total revenue receipts are projected at Rs. 2,33,988 crore, reflecting an 8% increase over the revised estimate for 2022-23. Of this amount, Rs. 1,38,454 crore (59%) will be generated from state resources, while Rs. 95,534 crore (41%) will come from central sources. Central resources include the state’s share of central taxes (26% of revenue receipts) and grants (15% of revenue receipts).
• Devolution: The state’s share in central taxes for 2023-24 is estimated at Rs. 61,552 crore, marking an 8% increase from the revised estimate of 2022-23. Grants from the central government are expected to be Rs. 33,982 crore, which is a 23% decrease compared to the revised estimates for 2022-23.
• State’s Own Tax Revenue: Rajasthan’s own tax revenue is estimated to be Rs. 1,14,169 crore in 2023-24, representing a 23% increase over the revised estimate for 2022-23. The own tax revenue as a percentage of GSDP is expected to be 7.2% for 2023-24. For 2022-23, this ratio was initially estimated at 7.4% but is now revised to 6.6%.

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

• In 2023-24, State GST is projected to be the largest contributor to own tax revenue, accounting for 43% of the total. The revenue from State GST is expected to grow by 36% compared to the revised estimates for 2022-23. However, for 2022-23, the actual receipts are anticipated to be 9% lower than originally budgeted.
• Revenue from sales tax/VAT in 2023-24 is estimated to rise by 16% over the revised estimates for 2022-23. Additionally, revenue from stamp duty and taxes on vehicles is forecasted to increase by 10% and 15%, respectively.

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

Deficits, Debt, and FRBM Targets for 2023-24

The Rajasthan Fiscal Responsibility Act, 2005 sets annual targets aimed at gradually reducing the state's outstanding liabilities, revenue deficit, and fiscal deficit.
Revenue Deficit: This is the gap between revenue expenditure and revenue receipts. A revenue deficit indicates that the government must borrow to cover expenses that do not enhance assets or lower liabilities. For 2023-24, the budget estimates a revenue deficit of Rs. 24,896 crore, which is 1.6% of the GSDP. In contrast, for 2022-23, the revenue deficit is projected to be Rs. 32,310 crore, or 2.3% of the GSDP, which exceeds the budget estimate of 1.8% of the GSDP.

• Fiscal Deficit: This represents the excess of total expenditure over total receipts. To cover this gap, the government resorts to borrowing, which increases total liabilities. In 2022-23, the fiscal deficit exceeded the budget estimates in absolute terms, but as a percentage of GSDP, it was lower by about 0.1 percentage point due to a 6% increase in GSDP from budget to revised estimates. For 2023-24, the fiscal deficit is projected to be 4.0% of GSDP. The central government has allowed a fiscal deficit of up to 3.5% of GSDP for states in 2023-24, with an additional 0.5% of GSDP available contingent upon implementing specific power sector reforms.
• Outstanding Liabilities: These are the total borrowings accumulated by the end of a financial year, including liabilities on public accounts. By the end of 2023-24, outstanding liabilities are estimated to be 36.8% of GSDP, slightly lower by 0.2 percentage points compared to the revised estimate for 2022-23 (36.6% of GSDP). However, this is an increase from the level in 2019-20 (35.3% of GSDP).

Annexure 1:  Comparison of states’ expenditure on key sectors

The graphs below compare Rajasthan’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 Rajasthan) as per their budget estimates of 2022-23.

• Health: In 2023-24, Rajasthan has allocated 7.4% of its total expenditure to health, exceeding the average allocation for health by states, which was 6.3% in 2022-23.
• Education: Rajasthan's allocation for education is 19.5% of its total expenditure, higher than the average allocation for education by states, which stood at 14.8%.
• Agriculture: Rajasthan has earmarked 4.3% of its expenditure for agriculture, which is below the average allocation for agriculture by states, which is 5.8%.
• Urban Development: Rajasthan’s allocation for urban development is 4.7% of its total expenditure, surpassing the average allocation by states, which was 3.5%.
• Police: Rajasthan has designated 3.0% of its total expenditure for police, lower than the average expenditure on police by states, which was 4.3%.
• Roads and Bridges: Rajasthan has allocated 3.6% of its total expenditure to roads and bridges, which is less than the average allocation by states, which is 4.5%.

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  8: Overview of Receipts and Expenditure (in Rs. crore)

Table  9: Key Components of State's Own Tax Revenue (in Rs. crore)

Table  10: Allocation towards Key Sectors (in Rs. crore)