Data: Actual Revenue Receipts of some states matched their budget estimates in 2021-22
Data available with the CAG in the form of ‘Monthly Key Indicators’ indicates that while some states managed to surpass their budget estimates for revenue receipts in 2021-22, some states did not. There is no single uniform reason for this trend.
The impact of the COVID-19 pandemic on the economy is apparent in the emerging data from the pandemic period. A fall in government revenues along with the additional expenditure of managing the pandemic has resulted in increased financial stress for the governments.
In an earlier story, we reported the fall in the tax revenues of the Union government. We also highlighted that there is an increasing trend of State governments resorting to borrowings and advances to tide over the pandemic-induced financial stress.
The financial year of 2021-22 marked a recovery compared to the pandemic that hit 2020-21. Although India experienced a more severe second wave of the pandemic in the early part of 2021-22, the restrictions & lockdowns were better managed than the first wave, with a comparatively lesser impact on economic activity.
But how was the recovery in 2021-22? In this two-part series, we look at the revenue earnings of the States during 2021-22, to understand the recovery compared to 2020-21. In the first part, we look at the states who have actual revenue receipts that were more than 95% of their budget estimates for 2021-22.
Methodology: The data submitted by the states & as available on the website of the Comptroller & Auditor General (CAG) is considered for the analysis. The data is collated from the ‘Monthly Key Indicators’ report of the respective states as of March 2022 i.e., the end of the financial year 2021-22. Revenue Receipts of the States are used for the analysis. Revenue Receipts include – Tax Revenue, Non-Tax revenue and any Grant-in-aid & contributions received. The Tax revenues of the states include – GST, Land revenue, Sales Tax, State excise duties, State share in Union taxes & other taxes. The states are categorized based on the proportion of Actual Revenue receipts compared to the budget estimates.
Odisha, Karnataka & Madhya Pradesh have significantly higher actual receipts than the estimates in 2021-22
Five states have reported actual revenue receipts to be more than the budget estimates in 2021-22. Here is a snapshot.
- The total revenue receipts of Odisha in 2021-22 was Rs.153 thousand crores which are significantly higher than its budget estimates of Rs.125.6 thousand crores i.e., 121.8% of the estimates. This is an improvement over the previous year, where-in the revenue receipts were Rs.104.38 thousand crores i.e., around 86% of the estimates for the year.
Tax Revenue in 2021-22 was Rs.78.89 thousand as against the estimate of Rs. 67.63 thousand crores. There was a significant increase in non-tax revenue which resulted in an overall increase in revenue receipts. As against the budget estimates of Rs. 20,000 crores of non-tax revenue, the actual receipts were more than Rs. 54 thousand crores. However, the actual breakup of the non-tax revenue was not available to ascertain the reasons for such an increase.
- Karnataka & Madhya Pradesh are the two other states which have higher actual revenue receipts compared to the estimates. With the Actual earnings of only 87% of the estimates during 2020-21, Karnataka lowered its estimates to Rs. 172 thousand crores in 2021-22. The actual receipts are pegged at Rs. 193.9 thousand crores, much higher than even the estimates of the previous year. As in the case of Odisha, a significant increase in tax revenue and a slight increase in non-tax revenue have contributed to this. Actuals for Karnataka’s share of Union taxes were 1.5 times higher than the estimates.
- Madhya Pradesh’s Actual revenue receipts were 112% of its estimates for 2021-22. However, unlike most of the other states, Madhya Pradesh’s actual revenue receipts even in 2020-21 were more than the budget estimates for the year. The estimates for 2021-22, were higher than that of the previous year and the state managed to earn more in both years. This increase is primarily due to a higher amount received as the state’s share of Union taxes compared to estimates.
- Tamil Nadu is among the highest revenue-earning states in the country. It is also among the most impacted in 2020-21 with only 79% of actual revenue receipts compared to its budget estimates for the year. The state made a significant recovery with slightly higher actual receipts than its estimates in 2021-22. However, it ought to be noted that the estimates for the year were lower than the previous year’s estimates, and the actuals are lower than the previous year’s budget estimates.
- Chhattisgarh’s actual revenue receipts in 2020-21 were only about 75% of the budget estimates. However, the state has managed more than 100% in actual revenue receipts in 2021-22 compared to the budget estimates. As in the case of Tamil Nadu, the estimates for 2021-22 were slightly lower than in 2020-21. Nevertheless, there has been an increase in the amount of the actual revenue receipts for the year. The state’s share of Union taxes is a significant contributor to the earnings of the State.
Gujarat, Rajasthan & West Bengal are among the states whose actuals nearly matched the estimates
Gujarat & Himachal Pradesh fell short of their estimates for 2021-22, but only by a smaller margin. Meanwhile, the actual revenue receipts of Rajasthan, West Bengal & Uttarakhand for 2021-22 are more than 95% of the estimates. Here is a snapshot of these states:
- The estimated revenue receipts in 2021-22 for Gujarat were Rs.167.9 thousand crores, while the actual receipts were Rs. 166.8 thousand crores i.e., 99.3%. This a major improvement after the shortfall in 2020-21, where-in the actuals were only 78.8% of the estimates for the year. It also ought to be noted that, unlike the other states highlighted earlier, the estimates for 2021-22 were higher than that of 2020-21. This increase is largely contributed by higher receipts from State Sales Tax & Grants-in-aid. The SGST collection from the states was only 69 % of the estimates.
- During the pandemic year of 2020-21, the actual revenue receipts of Rajasthan were around 76.6% of the estimates for the year. There is an improvement in the earnings of the state in 2021-22, which is 98.8% of the estimates, despite higher estimates for the year. As in the case of Gujarat, there was a significant shortfall from SGST estimates but was compensated by the state’s share of union taxes.
- West Bengal is another larger state whose actual revenue receipts for 2021-22 were more than 95% of estimates for the year. The actual revenue earnings for the year were Rs. 178 thousand crores, compared to the estimate of around Rs. 186 thousand crores. In 2020-21, the actual receipts were around 82% of the estimates. The state received 30% lower grants-in-aid than estimated but was compensated by a higher amount in the state’s share of union taxes.
- The smaller states of Uttarakhand and Himachal Pradesh have also managed to nearly match the actual earnings with the estimates. In the case of Himachal Pradesh, the actuals were 99.5% of the estimates in 2021-22. In contrast to most other states, the actual revenue of the state was better off even during 2020-21 when it was around 93.9% of the estimates for the year.
- Uttarakhand also has a similar trend. During the pandemic year of 2020-21, the actuals were around 90% of the estimates. Despite an increase in the estimates for 2021-22, the actuals were 97.5% of the estimates. The shortfall was due to the lower non-tax revenue compared to estimates.
In the second part, we will look at the states whose actual revenue receipts were less than 95% of the estimates for 2021-22.