HYDERABAD: The major challenge before Finance Minister T Harish Rao, who is presenting the Budget 2023-24 on Monday, is increase in committed expenditure and to mobilise resources for pending assurances and payments.
Though the State’s own tax revenues are increasing, so are new commitments that are adding to the State’s priority list such as the massive recruitment drive to fill vacancies. There may be around 10 to 15 per cent incremental hike in the budget outlay over 2022-23.
The size of the Budget 2023-24 may be around Rs 2.7 lakh crore to Rs 3 lakh crore against the estimated size of Rs 2.56 lakh crore in 2022-23. However, the moot question is whether the State will have anything left in its coffers for other development works except committed expenditure.
As the State is going to fill around 80,000 jobs in government in 2023-24, the committed expenditure is likely to cross 50 per cent of its revenue receipts. As though this cup of woes was not full, employees are demanding constitution of the second Pay Revision Commission (PRC).
If the State concedes the demand, the committed expenditure will further go up. If the subsidies too are taken into consideration, the committed expenditure may cross 60 per cent of the total revenue expenditure.
In 2019-20, around 49% of the revenue receipts was spent on committed expenditure like salaries, interest payments and pensions. In 2020-21, the figure went up to 55 per cent. If the new recruits join duties, the salary bill will further swell.
The estimated revenue expenditure for 2022-23 was Rs 1,89,274.82 crore, of which the outgo on interest payments would be Rs 18,911.88 crore, salaries Rs 33,942.05 crore and pensions is Rs 11,384.53 and subsidies is Rs 12,049.46 crore.The State, in fact, had a revenue surplus till 2018-19, but it has now dived into the red.
“Committed expenditure constituted about 54.60% of the total revenue receipts during 2020-21. There was an increase in all the components of committed expenditure. Interest payments in particular, are increasingly, consuming revenue receipts year after year. Interest payments were 10.40% of revenue receipts in 2016-17 and increased to 16.69 per cent in 2020-21. The continuous increase in committed expenditure and its share in revenue receipts results in lesser resource availability for non-committed expenditure (expenditure on development or welfare activities),” said the CAG report this year.
Further complicating the situation, the State government has not been receiving the expected grants-in-aid from the Centre and is also facing restrictions on market borrowings. As it is an election year, the State government will have no other option but to waive crop loans completely and implement the pending assurances, which require huge funding.It remains to be seen how the Harish will manage the show.
However, a positive thing to be considered is that the State’s revenues are growing at 12% per year. The State’s Own Tax Revenues were Rs 35,146 crore in 2014-15 increased to Rs 1 lakh crore now. But, the public debt to is Rs 2,89,873 crore and it would also increase further.
With increase in committed expenditure and restrictions on borrowing, the capital expenditure till December in 2022-23 Budget was Rs 12,491.65 crore against the estimated capital expenditure of Rs 29 728.43 for the entire year.
It remains to be seen how Harish Rao will strike a balance in the election year and please all sections. As against Rs 25,421.63 crore non-tax revenue estimated for 2023-24, the State realised only Rs 9,962.38 crore up to December as the State could not generate much revenues through sale of lands.
Cabinet gives nod to Budget proposals
The State Cabinet, which met at Pragathi Bhavan under the chairmanship of Chief Minister K Chandrasekhar Rao on Sunday, approved the Budget proposals for 2023-24. Finance Minister Harish Rao will present the Budget in the Assembly on Monday. Legislative Affairs Minister Vemula Prasanth Reddy will present the Budget in the State Legislative Council.