Himachal Pradesh Budget
India has a quasi-federal system of government and hence every state prepares its own budget. The Constitution of India stipulates that no expenditure can be incurred from the Consolidated Fund of a State without the authority of Appropriation Act. In order to obtain this authorization from State Legislature, a statement of anticipated receipts and expenditure for each financial year needs to be laid before the State Legislature in the form of a 'Budget'.
The Budgets are prepared for every fiscal year that begins on 1st of April in a year and ends on 31st of March in the following year. These Budgets capture the entire magnitude of funds collected by the government as well as the expenditure incurred from the government treasury in the previous year. The actual revenue and expenditure figures for the preceding fiscal year generally are revised estimates (RE) which are firmed up in the following year upon receipt of final figures from all departments.
The state earns its revenue primarily from levy of local taxes, income from state-owned enterprises and investments, and from its share of central taxes which are collected by the central government. In addition, it also receives annual grants from the Centre to carry out specific development projects. The expenses are undertaken for providing various social and economic services as well as to meet its obligations for debt servicing in the form of interest and principal repayments.
The State Budgets do not capture the Own Sources of Revenue collected by the institutions of local self governance (e.g. Municipalities in the urban areas and Panchayati Raj Institutions in the rural areas) and their expenditure from these funds; however, the size of such funds is believed to be very small as compared to the overall magnitude of funds and expenditure captured in the State Budgets. The total expenditure incurred from the State Budgets accounts for more than half of the Total Public Expenditure in the country. A large share of the total “developmental expenditure” incurred from the government budgets in the country, i.e. the budgetary expenditure on social services (such as, education, health, nutrition, water and sanitation) and economic services (such as, agriculture, irrigation, rural development, transport), is incurred from the State Budgets. Also, a substantial share of the total fiscal transfers to the institutions of local self governance, i.e. Municipalities and Panchayati Raj Institutions, is made by the State Governments through the State Budgets. Hence, the overall magnitude of the State Budgets is significant and the nature of spending incurred from those is crucial for development.
The budget figures presented here are sourced from Himachal Pradesh's budget documents and RBI.
India has a quasi-federal system of government and hence every state prepares its own budget. The Constitution of India stipulates that no expenditure can be incurred from the Consolidated Fund of a State without the authority of Appropriation Act. In order to obtain this authorization from State Legislature, a statement of anticipated receipts and expenditure for each financial year needs to be laid before the State Legislature in the form of a 'Budget'.
The Budgets are prepared for every fiscal year that begins on 1st of April in a year and ends on 31st of March in the following year. These Budgets capture the entire magnitude of funds collected by the government as well as the expenditure incurred from the government treasury in the previous year. The actual revenue and expenditure figures for the preceding fiscal year generally are revised estimates (RE) which are firmed up in the following year upon receipt of final figures from all departments.
The state earns its revenue primarily from levy of local taxes, income from state-owned enterprises and investments, and from its share of central taxes which are collected by the central government. In addition, it also receives annual grants from the Centre to carry out specific development projects. The expenses are undertaken for providing various social and economic services as well as to meet its obligations for debt servicing in the form of interest and principal repayments.
The State Budgets do not capture the Own Sources of Revenue collected by the institutions of local self governance (e.g. Municipalities in the urban areas and Panchayati Raj Institutions in the rural areas) and their expenditure from these funds; however, the size of such funds is believed to be very small as compared to the overall magnitude of funds and expenditure captured in the State Budgets. The total expenditure incurred from the State Budgets accounts for more than half of the Total Public Expenditure in the country. A large share of the total “developmental expenditure” incurred from the government budgets in the country, i.e. the budgetary expenditure on social services (such as, education, health, nutrition, water and sanitation) and economic services (such as, agriculture, irrigation, rural development, transport), is incurred from the State Budgets. Also, a substantial share of the total fiscal transfers to the institutions of local self governance, i.e. Municipalities and Panchayati Raj Institutions, is made by the State Governments through the State Budgets. Hence, the overall magnitude of the State Budgets is significant and the nature of spending incurred from those is crucial for development.
The budget figures presented here are sourced from Himachal Pradesh's budget documents and RBI.
SUBJECT Variables
RECEIPTS
This is the money received by the government from tax and non-tax sources to enable it to undertake government expenditures.
Receipts (excluding borrowings)
- The receipts (excl borrowings) in 2021-22 are budgeted at ₹37,069 crore, 4.1% higher than the actual receipts estimated in 2020-21.
- The receipts (excl borrowings) in 2020-21 are estimated to be lower than budgeted by ₹2,846 crore (7.4% of the budget).
Total receipts (including borrowings)
- The total receipts (incl borrowings) in 2021-22 are budgeted at ₹48,800 crore, 4.6% lower than the actual receipts estimated in 2020-21.
- The total receipts (incl borrowings) in 2020-21 are estimated to exceed its budget by ₹5,157 crore (11.2% of the budget)
Revenue Receipts are those sources of revenue that are recurring in nature. They do not create any liability nor cause any reduction in the assets of the government. These include the proceeds from local taxes levied by the state, share of taxes levied by the Centre, fees and charges levied for providing various services, interest and dividend received on investments, and grants-in-aid received from the Centre.
Himachal Pradesh's total revenue receipts for 2021-22 are budgeted at ₹37,028 crore, 4% higher than the actual revenue receipts estimated in 2020-21. Revenue receipts comprise 76% of the total receipts budgeted in 2021-22.
Tax Revenue
- Revenue from taxes levied by Himachal Pradesh is budgeted at ₹9,282 crore in 2021-22, 17.2% higher than the actual collections estimated in 2020-21. Tax revenue is expected to contribute 25% of the government's total receipts (excl borrowings) in 2021-22.
- The actual tax revenue in 2020-21 is expected to fall short of its budget by ₹1,173 crore (13% of the budgeted amount)
- Himachal Pradesh's tax revenue has been consistently falling short of its budget since 2016 by an average of 6.8% annually
Non-Tax Revenue
- Revenue from non-tax sources such as interests, dividends and fees in 2021-22 is budgeted at ₹2,754 crore, 21.4% higher than the actual receipts estimated in 2020-21.
- The actual non-tax revenue in 2020-21 is expected to fall short of its budget by ₹142 crore (5.9% of the budgeted amount)
Share in Central Taxes
- In 2021-22, receipts from Himachal Pradesh's share in Central taxes are budgeted at ₹5,524 crore, 25.7% higher than the actual receipts estimated in 2020-21.
- The actual receipts from share of Central taxes in 2020-21 are expected to fall short of the budget by ₹1,871 crore (30% of the budgeted amount).
- In line with the recommendations of the 15th Finance Commission, Himachal Pradesh's share in the Centre's tax revenue will increase from 0.30% applicable during the 2015-20 period to 0.33% from 2020-21 onwards (a 10% increase).
Central Grants
- Receipts from grants-in-aid by the Centre are budgeted at ₹19,468 crore in 2021-22, 7.3% lower than the actual receipts estimated in 2020-21. Central grants are expected to contribute 52.5% of Himachal Pradesh's total receipts (excl borrowings) in 2021-22.
- The actual receipts from Central grants in 2020-21 are expected to exceed its budget by ₹336 crore (1.6% of the budgeted amount).
Capital receipts are those that create liabilities and are non-recurring in nature. These include loans taken by the state from the public, financial institutions and the Centre. It also includes recoveries of loans and advances given by the State.
Himachal Pradesh's total capital receipts for 2021-22 are budgeted at ₹11,772 crore, 28.2% lower than the actual capital receipts estimated in 2020-21. Capital receipts comprise 24% of the total receipts budgeted in 2021-22.
- Borrowings to cover the revenue shortfall are budgeted at ₹7,554 crore in 2021-22, 24.5% lower than the actual borrowings estimated in 2020-21. 99.4% of the budgeted borrowings in 2021-22 are in the form of internal debt and only 0.6% is through loans or advances taken from the Centre.
- The actual borrowings in 2020-21 are expected to exceed its budget by ₹8,003 crore (106% of the budgeted amount)
- Recoveries of loans and advances are budgeted at ₹41 crore in 2021-22. The actual receipts from recoveries of loans and advances in 2020-21 are expected to exceed its budget by ₹5K crore.
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