Gujarat Budget: State Steps Up Spending On Urban Infrastructure, Subsidies
Gujarat gets 20% of own tax revenue via GST compensation, which is likely to end this year.
Gujarat Finance Minister Kanubhai Desai presented the 2022-23 state budget on March 3. This is Desai’s first budget since he assumed office in 2021.
The budget speech contained several announcements, including a programme to provide nutritional supplements for pregnant women and mothers, and an interest subvention scheme for farmers. This is the last full budget of the current government before their tenure ends in February 2023.
The government announced that it would provide free pulses and edible oil to pregnant and lactating mothers for up to 1,000 days. An amount of Rs 800 crore has been allocated for this programme in the next financial year under the Suposhit Mata - Swasth Bal Yojana.
Separately, the government announced an interest subvention scheme for short-term loans to livestock owners and fishermen.
Higher Allocation For Urban Development
Gujarat spends about 6% of its budget on urban development. This is among the highest across India.
For the next year, spending towards urban development is estimated to increase by 19% to Rs 12,639 crore, and about a third of the allocation is towards the Swarnim Jayanti Mukhymantri Shehri Vikas Yojana.
The programme aims to provide basic infrastructure facilities in municipal corporations, municipalities and urban authorities.
Octroi Compensation Increased
Octroi and other local body taxes were subsumed under GST. As compensation for loss of revenue to municipal and district bodies, the state has been providing octroi compensation to them. For the next year, the grant-in-aid for octroi compensation has been increased by 10% to Rs 468.1 crore from Rs 426.7 crore in 2020-21.
GST Compensation
Gujarat has relied on GST compensation grants during 2018-22 to achieve the guaranteed SGST revenue level. In 2021-22, Gujarat is estimated to receive 20% of its own tax revenue in the form of GST compensation grants and back-to-back loans.
Thus, beyond June 2022, the state’s other sources of revenue must increase to make up for the shortfall.
As per revised estimate numbers for the current year, state GST is expected to register an increase of 17% to Rs 42,978 crore over the budget estimate. Revenue from stamp duty and sales tax are expected to increase by 17% and 25% (over the budget estimate) respectively.
Higher Proportion Towards Subsidies
Gujarat spends 10% of its budget towards subsidies. For the current year, it has estimated it would spend Rs 22,155 crore. This is a 20% increase over the previous year (Rs 18,420 crore).
Energy and petrochemicals receive the highest subsidies, followed by agriculture and cooperation. Other major subsidies provided by the Gujarat government include subsidies provided to food and civil supplies, and ports and transport.
Loan Recovery Adds To State Exchequer
Gujarat saw a substantial increase under non-debt capital receipts in 2020-21. Gujarat had estimated it would receive Rs 265 crore in 2020-21, but Rs 10,123 crore was added to the state’s exchequer in the year.
This was on account of Rs 9,958 crore as other miscellaneous capital receipts and Rs 10 crore from disinvestments of public sector and other undertakings.
Read the full article on the Gujarat budget on the PRS Legislative Research website.