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Mainstream, VOL LIX No 19, New Delhi, April 24, 2021

Buoyancy & Focus in Budgets of Haryana and Delhi During 2014-2021 | Sher Singh Sangwan

Friday 23 April 2021

by Sher Singh Sangwan*

Budget is not only a financial plan for a defined period, normally a year but it is known to greatly enhance the success of any financial undertaking or a government. Government budgets are more dynamic than that of individual or firm as the former has authority to mobilize additional resources as per the objective/election manifesto of the party in power. Keeping in view this broad meaning, this paper discusses the budgets of Haryana and Delhi where two different parties have been in power for almost similar period i.e. 2014-15 to 2022-21.

Haryana is ₹155645 crore for 2021-22 which has surpassed the ₹138015 crore budget of its neighboring and bigger State of Punjab. But Haryana may have more political challenge from its other neighboring state of Delhi which has impacted the Punjab owing to its focus social services and better administration. It has happened despite Delhi’s limited statehood which is further crippled by passing the Government of National Capital Territory of Delhi (Amendment) Bill, 2021 on 22 March 2021.

Comparison is also important as Haryana is being ruled by BJP and Delhi by Aam Admi Party (AAP) from 2014-15. The projected population of both states is approaching 3 crore in 2021 with dominance of migrant laborers. The Gross State Domestic Product (GSDP) of Haryana at constant 2011-12 prices in 2019-20 is ₹ 559705 crore as against ₹ 634408 of Delhi. In real terms, during the period 2014 to 2020, the GSDP of Haryana has grown at the average annual growth of 6.24 % compared to 7.4 % in Delhi and 4.5 % of all India. Though, on account of Covid-19 pandemic during 2020-21, GSDPs of Haryana and Delhi contracted by about 5.7 % as compared to 7.96 % of all India. The share of primary, secondary and tertiary sectors in GSDP of Haryana in 2020-21, is 19.1%, 30.0 % and 50.9 %, respectively as compared to 1.47% 13.37% and 85.2 % in Delhi. The per capita income at current price in 2020-21 is likely to be about ₹239535 in Haryana and ₹354004 in Delhi as against ₹ 127768 of all India. It is to be noted that Delhi has more number of better paid Central government employees. The size of estimated budget for 2021-22 is ₹155645 crore in Haryana as compared to ₹69000 crore of Delhi. It may be due to difference in area as well as exclusion of some departments from the state of Delhi. Notwithstanding the difference in absolute figures, an attempt is made to compare the sub sector-wise percentage allocation in the Haryana and Delhi in BEs 20-21& 2021-22 and actuals of 2014-15 and 2019-20. The RE of 2020-21 is not used for analysis due to special expenditure for Corona epidemic.

Buoyancy in the Budgets of Haryana and Delhi

Haryana budget 2021-22 is 13 % more than its RE 20-21whereas Delhi budget 2021-22 is about 17 % higher than the RE of 20-21. Of the total budget, the revenue expenditures (REx) in both the states are around 75 % whereas the capital expenditures (CEx) are about 25 % i.e. ₹ 38718 crore in Haryana and ₹17201 in Delhi (Annexure 1 & 2). But in the CEx of Haryana, repayment of principal amount is ₹28161 crore i.e. 18 % of the total budget as compared to ₹ 4265 crore (5 %) in Delhi. Hence, the net CEx available for asset creation and loans & advances in Haryana is ₹10557 whereas, it is ₹12936 in Delhi. Both the States have been unable to levy additional taxes and increase in the budgets has mainly been due to buoyancy of the taxes and borrowings.
The increase in budget of Haryana in 2021-22 over 2014-15 is 114 % against 80% of Delhi but it is mainly due to more increase in public debt in Haryana. The tax revenue is around 90 % of total receipts in Delhi as against about 58 % in Haryana whereas its outstanding (O/S) debt may reach to ₹199823 crore at the end of 2020-21 as compared to about ₹ 35000 crore of Delhi. Haryana’s O/S debt as March 2021 will be 2.82 times of ₹ 70931 crore as on March 2015 whereas Delhi has reduced its debt due to surplus budget since 2016-17(CAG Report 2018).

The revenue deficit (RD) of Haryana in BE of 2021-22 is ₹29194 crore (around ₹19000 crore in previous two years) i.e. 3.29 percent of GDP whereas the Delhi budget has surplus of ₹1270 crore. The interest payments in the BE 2021-22 of Haryana are ₹20376 (₹17663 crore in RE 20-21) i.e 13 % in total budget as compared to 5 % in Delhi. Thus, the outgo as interest payments and repayment of loan- installment works out to be about 31 % of the total budget in Haryana as against 10 % in Delhi. Thus less availability of CEx in Haryana may be making all the difference in lying of sewerages, water supply lines, constructions of roads & bridges, school building and health infrastructure, etc.

Focus of Budget Allocations in Haryana

The share of a Sector depends upon its size and coverage of population as well as the priorities of the ruling party. To study the focus in budgets, if any, sector-wise increases in BE 2021-22 over the BE 2020-21as well as the actual of 2014-15 are worked out in columns 6 and 7 in Annexure 1. The sector/items which show higher allocation in REx over time are interest payments, health & family welfare, agriculture and allied, rural development and general economic services (GES) while there is a decline in the share of education, pensions, energy and transport. The CEx has decreased in almost all sectors except the repayment of borrowings (13 to 18%) and health (0.11 to 0.73 %) and GES (0.05 to 0.28) during 2014-15 to 2021-22. The combined shares of Revenue and capital expenditures for major sectors are depicted in Figure-1 on the basis of Table 1. The analysis of the Haryana budgets reveals that the health sector as the only focus area otherwise budgeting has been an easy going routine exercise and government has resorted to more borrowings even for REs without daring for additional taxes.

Focus of Budget Allocations in Delhi

Similar analysis of sectoral allocations has been done for budgets of Delhi State in Table-2 based on Annexure -2. It reveals that share of REx under social services like education, health and water supply, flood control and transport has increased over the actual of 2014-15. Further, the share of CExs in Delhi is much higher than Haryana for sub-sectors like education, Health & family welfare, water supply and transport. The CEx in social sector are almost equal to Haryana in absolute number too despite the size of budgets in Delhi being less than half of Haryana. Even loan and advances to employees and departments are much higher in Delhi. The combined revenue and capital expenditures for major sectors are depicted in figure -2.

Conclusions

The analysis of budgets during the period 2014-15 and 2021-22 throws that the buoyancy in the size of budgets is higher in Haryana than that of Delhi. But the buoyancy in Haryana is mainly due to 2.82 times increase in public debt and even revenue deficit of around ₹15000 crore whereas Delhi has presented surplus budget after 2016-17. The sectroral allocations in Haryana is almost routine except the health sub-sector whereas in Delhi budgets, the sub-sectors like education/sports, public health, water supply and transport have got higher allocation especially in the CEx. It indicates that Delhi Government of AAP has focused more on public relevant sectors since 2014-15. It is this focus which has led to increased public support for it in Punjab assembly elections in 2017 and the Party repeated its massive majority in Delhi in 2020( Sangwan, 2020). It is on the strength of this model and their better governance that AAP may be hoping to get support in other states.

* (Author: Dr Sher Singh Sangwan, Former professor SBI Chair, #1437, sector 1, Rohtak
Email: drsangwan8[at]gmail.com)

10 April 2021

1. Government of Haryana (2021): The Annual Financial Statements of the Budget 2021-22 and 2016-17. Accessed from www.finhry.gov.in
2. Government of Delhi (2021): The Annual Financial Statements of the Budget 2021-22 and 2016-17. Accessed from finance.delhigovt.nic.in
3. Government of Punjab (2021): The Annual Financial Statements of the Budget 2021-22, punjab.gov.in
4. Sangwan S S (2020): Massive Mandate to AAP to have Repercussions beyond Delhi, Mainstream, VOL LVIII No 10 New Delhi, February 22, 2020

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