Uttar Pradesh Budget (2021-22)
- The Finance Minister of Uttar Pradesh, Mr. Suresh Khanna, presented its biggest-ever budget of Rs 5,50,270.78 crore for the financial year 2021-22 in the state Assembly with a target to make Uttar Pradesh ‘AtmaNirbhar’.
- This year’s Budget, which is 7.3 per cent bigger than the last one, has allocated Rs 27,598 crore for new schemes – up from Rs 10,967 crore in 2020 – with infrastructure development bagging the lion’s share.
- This was the Adityanath government’s first paperless budge.
- The Budget makes a provision of Rs 101 crore for the under-construction airport in Ayodhya, which will be named ‘MaryadaPurushottam Sriram Airport’.
- Thie year’s budget is the fifth budget of the Adityanath government in the state.
- The Gross State Domestic Product (GSDP) of Uttar Pradesh for 2021-22 (at current prices) is projected to be Rs 21,73,990 crore. This is an annual increase of 13% over 2019-20. This is 12% higher than the revised estimate of GSDP for 2020-21 (Rs 19,40,527 crore). In 2020-21, GSDP is estimated to be 8.3% higher than the budget estimate. In comparison, the nominal GDP of India is estimated to contract by 13% in 2020-21, and grow by 14.4% in 2021-22.
- Total expenditure for 2021-22 is estimated to be Rs 5,50,271 crore, a 20% annual increase over the 2019-20 expenditure.
- Total receipts (excluding borrowings) for 2021-22 are estimated to be Rs 4,20,672 crore, an annual increase of 6% over 2019-20. In 2020-21, total receipts (excluding borrowings) are estimated to fall short of the budget estimate by Rs 1,15,766 crore (decrease of 27%).
- Revenue surplus for 2021-22 is estimated to be Rs 23,210 crore, which is 1.07% of the GSDP. In 2020-21, as per the revised figures, revenue deficit is estimated at Rs 13,161 crore (0.68% of GSDP) though the budget for 2020-21 had estimated a revenue surplus of Rs 27,451 crore (1.53% of GSDP).
- Fiscal deficit for 2021-22 is targeted at Rs 90,730 crore (4.17% of GSDP). In 2020-21, the revised estimate for fiscal deficit is expected to be 4.17% of GSDP, higher than the budget estimate of 2.97% of GSDP.
Policy Highlights (New Schemes)
- AtmanirbharKrishakSamanvit Vikas Yojana: A new scheme will be introduced to achieve doubling of farmers’ income by 2022. It will focus on identification of more productive crops in each agri-climate zone, promote new technology and investment to improve productivity, and developing markets for distribution. Rs 100 crore has been allocated for this scheme.
- Mukhyamantri Saksham Suposhan Yojana: A new scheme will be launched to combat the issue of malnutrition of women and children. Nutritional supplements, in addition to dry ration, will be provided to children below five years of age and girls between 11 to 14 years of age who are suffering from anaemia.
- MukhamantriPravasiShramikUdyamita Vikas Yojana will be introduced to provide employment and self-employment to workers who returned back to the state due to COVID-19.
- The government has also proposed setting up one “Sainik School” in every division of the state and provide residential facilities to students of Sanskrit education in the state.
- Proposal to develop the Institute of Virology and Infectious Disease in Lucknow
- Provision of Rs 15,000 crore has been marked for Jal Jeevan Mission (rural) scheme and with stress on infrastructural development, it proposes Rs 1,107 crore for Purvanchal expressway, Rs 1,492 crore for Bundelkhand expressway and Rs 860 crore for Gorakhpur link expressway and Rs 7,200 crore for land acquisition for Ganga Expressway and Rs 489 crore for construction works.
- Under the special area programme, the budget provides for Rs 300 crore for special schemes for Purvanchal and Rs 210 crore for Bundelkhand.
Expenditure in 2021-22
- Capital Outlay: Uttar Pradesh’s capital outlay for 2021-22 is estimated to be Rs 1,13,768 crore, which is annual increase of 38% over 2019-20. The revised estimate for capital outlay in 2020-21 is Rs 68,254 crore which is 16% lower than the budget estimate.
- Capital expenditure for 2021-22 is proposed to be Rs 1,55,140 crore, which is an annual increase of 35% over the actual expenditure in 2019-20.
- Revenue expenditure for 2021-22 is proposed to be Rs 3,95,130 crore, which is an annual increase of 15% over 2019-20.
- In 2021-22, expenditure on debt servicing is estimated to be Rs 82,398 crore, which is an annual increase of 20% over 2019-20.
- Committed expenditure of a state typically includes expenditure on payment of salaries, pensions, and interest.
- In 2021-22, Uttar Pradesh is estimated to spend Rs 2,56,592 crore on committed expenditure, which is 61% of its revenue receipts.
- This is an annual increase of 17% over 2019-20.
- This comprises spending on salaries (35% of revenue receipts), pension (16%), and interest payments (10%).
- In 2020-21, payment towards salaries and pension decreased by -20% and 15% from budget to revised state.
Receipts in 2021-22
- Total revenue receipts for 2021-22 are estimated to be Rs 4,18,340 crore, an annual increase of 7% over 2019-20.
- Of this, Rs 2,02,956 crore (49%) will be raised by the state through its own resources, and Rs 2,15,384 crore (51%) will come from the centre.
- Resources from the centre will be in the form of state’s share in central taxes (29% of revenue receipts) and grants (23% of revenue receipts).
- Devolution: In 2021-22, receipts from the state’s share in central taxes are estimated to register an annual increase of 1% over 2019-20.
- State’s own tax revenue: Total own tax revenue of Uttar Pradesh is estimated to be Rs 1,77,535 crore in 2021-22, an annual increase of 20% over the actual tax revenue in 2019-20.
- The GST (Compensation to States) Act, 2017 guarantees states compensation for five years (till 2022) for any revenue loss arising due to GST implementation.
- The Act guarantees states a 14% annual growth in their GST revenue, failing which compensation grants are provided to states to meet the shortfall.
- These grants are funded through the GST compensation cess levied by the centre.
- As per the revised estimate of 2020-21, Uttar Pradesh is estimated to receive a total of Rs 6,054 crore in the form of GST compensation grants which is 16.9% higher than that in 2019-20 (Rs 5,180 crore).
- In 2021-22 Rs 8,810 crore is expected as GST compensation grants, which is 30% higher than the grants received in 2019-20.
- In 2021-22, SGST is estimated to be Rs 64,475 crore, which is the largest source (36%) of the state’s own tax revenue.
- This is an annual increase of 17% over the actual SGST revenue in 2019-20.
- In 2020-21, SGST is estimated to be 20% less than the budget estimate.
- In 2021-22, Uttar Pradesh is expected to generate Rs 41,500 crore through the collection of State Excise, an annual increase of 23% over 2019-20.
- In 2020-21, the State Excise collection is estimated to decrease by 24% over the budget estimates.
- In 2021-22, Rs 31,100 crore is estimated to be generated through Sales Tax and VAT which is an annual increase of 23% over 2019-20.
Deficits, Debts and FRBM Targets for 2021-22
The Uttar Pradesh Fiscal Responsibility and Budget Management (FRBM) Act, 2004 provides annual targets to progressively reduce the outstanding liabilities, revenue deficit and fiscal deficit of the state government.
Fiscal Roadmap for 2021-26
The 15th Finance Commission recommended the following fiscal deficit targets for states for the 2021-26 period (as a % of GSDP): (i) 4% for 2021-22, (ii) 3.5% for 2022-23, and (iii) 3% for 2023-26.
Revenue surplus: It is the excess of revenue receipts over revenue expenditure. The 2021-22 budget estimates a revenue surplus of Rs 23,210 crore (1.07% of the GSDP) in 2021-22.
Fiscal deficit: It is the excess of total expenditure over total receipts. This gap is filled by borrowings which leads to an increase in total liabilities. In 2021-22, the fiscal deficit is estimated to be Rs 90,730 crore (4.17% of GSDP). This is higher than the 3% limit as per the FRBM Act.
Uttar Pradesh’s expenditure on six key sectors
- Education: Uttar Pradesh has allocated 13.3% of its total expenditure for education in 2021-22. This is lower than the average allocation (15.8%) for education by all states (2020-21 BE).
- Health: Uttar Pradesh has allocated 6.3% of its total expenditure on health, which is higher than the average allocation for health by states (5.5%).
- Agriculture: The state has allocated 2.7% of its total expenditure towards agriculture and allied activities. This is significantly lower than the average allocation for agriculture by states (6.3%).
- Rural development: Uttar Pradesh has allocated 5.4% of its expenditure on rural development. This is lower than the average allocation for rural development by states (6.1%).
- Police: Uttar Pradesh has allocated 5.7% of its total expenditure on police, which is higher than the average expenditure on police by states (4.3%).
- Roads and bridges: Uttar Pradesh has allocated 8.2% of its total expenditure on roads and bridges, which is almost double the average allocation by states (4.3%).
Recommendations of the 15th Finance Commission for 2021-26
- The 15th Finance Commission’s (FC) report for the 2021-26 period was released on February 1, 2021.
- For the 2021-26 period, the Commission has recommended the share of states in the divisible pool of central taxes to be 41%, same as that for 2020-21 (also recommended by the 15th FC in its report for 2020-21).
- This is 1% point lower than the 42% share recommended by the 14th FC (for the 2015-20 period) to separately provide funds for the newly formed union territories of Jammu and Kashmir, and Ladakh.
- The 15th FC proposed revised criteria for determining the share of individual states (different from 14th FC).
- Based on the 15th FC’s recommendations for the period 2021-26, Uttar Pradesh will have a 7.36% share in the divisible pool of central taxes.
- This implies that out of every Rs 100 of revenue in the divisible pool during the 2021-26 period, Uttar Pradesh will receive Rs 7.36.
- This is lower than Rs 7.54 recommended by the 14th FC.
Budgetallocations on major items in Budget 2021-2022
- Rs 10,029 crore has been earmarked for housing
- Rs 2,200 crore for Amrit Yojna
- Rs 2,000 crore for Smart City project
- Rs 1,000 crore for Mukhya Mantri SamagraSampada Vikas Yojna
- Rs 7,000 crore for PM AwasGramin
- Rs 5,000 crore for PM SadakYojna
- Rs 3,100 crore for farmers’ pension
- Folk artists facing a financial crisis will get a monthly assistance of Rs 2,000
- Education (University in every division; Rs 200 crore for model colleges in 26 districts)
- Under Mukhya Mantri Kanya Sumangal Yojana, the government allocated Rs 1,200 crore to give tablets to girl students
- Rs 100 crore for metro rail projects in Varanasi and Gorakhpur
- Rs 50 crore for RashtriyaPrerna Sthal in Lucknow
- Rs 140 crore for the overall development of Ayodhya
- Rs 101 crore for the airport in Ayodhya, Rs 2,000 crore for Jewar airport
- Rs 750 crore for Gorakhpur Expressway, Rs 1,107 crore – Purvanchal Expressway, Rs 1,492 crore – Bundelkhand Expressway
- Rs 400 crore for loans to farmers on subsidised rates
- Rs 700 crore allocated for irrigation
- Rs 600 crore for Krishi Durghatna Yojana
- Rs 100 crore for AtmaNirbharKrishikSamanvit Vikas Yojana
- Rs 50 crore allocated for COVID vaccination
- Rs 32 crore for establishingMahila Shakti Kendras.
- Rs 5,000 cr for Ganga Expressway land
- 4,094 crores for the nutritional programme and Rs 415 crore for the National Nutritional Campaign
- Rs 100 crore for providing employment and self-employment to migrant workers under the MukhyamantriPravasiShramikUdyamita Vikas Yojna.
- Rs 1,300 crore for Ayushman Bharat.
GSDP:The growth rate of Uttar Pradesh’s GSDP (at constant prices) was 3.8% in 2019-20, which is less than the growth rate in 2018-19 (6.3%).
Sectors:In 2019-20, agriculture, manufacturing, and services sectors contributed to 23%, 27%, and 50% of the economy. In 2019-20, the growth of all three sectors declined as compared to 2018-19.
Per capita GSDP: The per capita GSDP of Uttar Pradesh in 2019-20 (at current prices) was Rs 74,141, 5% higher than in 2018-19.
Unemployment: According to the Periodic Labour Force Survey 2018-19, Uttar Pradesh has an unemployment rate of 5.7%, which is similar to the all-India unemployment rate of 5.8%.