An election year budget: Not more, not less

Udayan Hazarika

(The writer can be reached at udayanhazarika@hotmail.com)

 The Budget 2024–25 (FY 25) is now before the public to analyse and the legislature to vote on it and pass through Appropriation Bill 2024. The budget shows a surplus of Rs 1594.94 crore for the year in question. However, as the opening balance is negative at Rs 2369.41 crore, the total balance shows a deficit of Rs 774.47 crore for the year.

The receipt side of the budget for FY-25 shows an estimated total of Rs 114164.87 crore to be collected from various sources, excluding borrowing. Of this amount, Rs 111943.84 crore is proposed to be collected from various revenue sources, such as taxes, etc., as revenue receipt, and the remaining Rs 2221.03 crore from the recovery of loans and advances offered by the state government as capital receipt. The amount falls short of the amount proposed for total expenditure, i.e., Rs 143890.62 crore, by about Rs 29725.75 crore. As the government proposes to repay the debt in the amount of Rs 7192 crore, the net expenditure amount will come to Rs 136698.62 crore. Thus, there will be a gap of Rs 22533.75 crore, which the government proposes to bridge by resorting to public borrowing from various sources.

Of the total revenue receipt, an amount of Rs 74148.42 crore, comprising 66.20 percent of the total revenue receipt, is proposed to be collected as taxes. This amount is 19.68 percent higher than the current year’s amount of Rs 61,953 crore. However, the collection so far in this front for the current year appears to be falling short as per the figures available for December 2023, which come to Rs 40408 crore, comprising only 65.22 percent of the total tax revenue fixed for collection in the current year. So by the end of the year, the government may not be able to collect the targeted amount in full. In the case of non-tax revenue, which happens to be the second-largest source of the state’s own resources, the estimated amount proposed to be collected is Rs 8871.28 crore. The amount fixed for the current year is Rs 7123.57 crore, as per the revised estimate. (RE) However, out of this, so far only Rs 3501.12 crore (or 50%) has been collected. Usually, the highest amount collected from this source is around 75 percent every year. The third notable source of total revenue receipt is grant-in-aid and contribution. An amount of Rs 28924.14 crore is proposed to be collected from this source. The amount is transferred from the Government of India under various schemes as grant-in-aid. In the current year, the total amount proposed for collection from this source was Rs 45,253.25 crore (revised), out of which only Rs 11770 crore, or 26 percent of the targeted amount, has been collected. This may be the reason why the amount under this grant-in-aid has been reduced by about 36.08 percent for FY 25.

In the case of the capital receipt, the total estimated amount comes to Rs 31661.73 crore, out of which Rs 2221.03 crore will come from loans and advances and the remaining will be from public debt, as discussed already. As there are no other sources to meet the total expenditure, an amount of Rs 29440.70 crore (gross borrowing) comprising 20.44 percent of the total receipt is proposed to be borrowed. The proportion is undoubtedly towards the higher side, considering the fact that the magnitude of the government’s outstanding borrowing stands at Rs 1.50 lakh crore. Although the interest portion of the amount is steadily decreasing, the government also needs to chalk out a plan for repayment of the principal portion. Of the total amount fixed for borrowing, Rs 14943.40 crore will be realized as an interest-paying loan and Rs 5150.00 crore as a non-interest-accruing loan. Of the remaining amounts, Rs 5089.31 crore will come from NABARD sources and Rs 4258 crore from block loans.

On the expenditure front, the total amount budgeted is Rs 1.44 crore. This amount is only 1.38 percent higher than the current year’s allocation of Rs 1.42 lakh crore. Of this, Rs 1.10 crore is for revenue expenditure and Rs 33799 crore is for capital expenditure, which constitutes 23.49 percent of the total expenditure. Thus, 76.51 percent of the total estimated expenditure is meant for revenue expenditure. Under this head, an amount of Rs 36399 crore is allocated for the payment of salaries, pensions, and wages to government employees, comprising 33.0 percent of the total revenue expenditure. This amount appears to be quite low compared to the current year’s amount of Rs 58230.22 crore. The contraction is to the tune of 37.49%. Apart from this, Rs 33428 crore is allocated for implementing various schemes under SOPD. From this account, various popular schemes, such as Arundhati-2, Lakhpati Baideo, etc., will be implemented. For the central sector scheme, an amount of Rs 20032 crore and Rs 78642 crore are allocated to meet the establishment expenditure. It may be noted that in the current year, the total amount proposed for establishment expenditure could not be utilized for more than 60 percent of the budgeted amount. As the election is nearing, the model code of conduct will be imposed immediately after the announcement, and by the first week of March, there will be no time left to spend the budgeted amount. With the gross revenue receipt of Rs 111943.84 and the gross revenue expenditure of Rs 110091.86, the revenue deficit comes to Rs 1851.98 for the year.

The present budget worked out that the gross state domestic product for the years 2022–23 was 4.93 lakh crore. These are the quick estimates, and three more estimates, namely two advanced estimates and one provisional estimate, are to be made before we actually get the final figure for gross domestic product. Similar is the case with the gross domestic products of 2023–24, which have been noted at Rs 5.70 lakh crore. The actual figures are usually available over a three-year’ period. The government has fixed the GSDP for the years 2024–25 at Rs 6.43 lakh crore randomly. How the figure was arrived at has not been disclosed. This figure is used for calculating macro variables like fiscal deficit, primary deficit, etc. With the borrowing level for the year in question at Rs 22533.75 crore and the GSDP at Rs 6.43 lakh crore, the fiscal deficit comes to 3.5 percent of the GSDP.

This year, the government has reduced the budget allocation in respect of certain central schemes substantially, including MNREGA. For example, in the case of PM’s Gram Sadak Yojana, the allocation has been reduced from Rs 1103.43 crore to Rs 720 crore; in the case of Swach Bharat Mission (rural), the allocation has been reduced to Rs 652.70 crore from Rs 779.83 crore; in the case of AIBP, the allocated amount has been reduced from the current year’s Rs 365.42 crore to Rs 202.33 crore; in the case of PM’s Maytshya Yojana, the amount has been reduced to 4.00 crore from Rs 630 crore last year, etc.

The above is an analysis of the technical part of the budget. The present budget as a whole is a compilation of hundreds of popular schemes, some of which are already going on and some that are newly introduced. This is perhaps to appease the voters, as elections are around the corner.