The State increases its expenditure on urban infrastructure and its subsidies

Gujarat Finance Minister Kanubhai Desai presented the state budget 2022-23 on March 3. This is Desai’s first budget since taking office in 2021.

The budget speech contained several announcements, including a program to provide nutritional supplements to pregnant women and mothers, and an interest subsidy program for farmers. This is the current government‘s last full budget before its term ends in February 2023.

The government announced that it would provide free pulses and edible oil to pregnant and lactating women for up to 1,000 days. An amount of Rs 800 crore has been allocated for this program in the next financial year under the Suposhit Mata – Swasth Bal Yojana.

In addition, the government has announced an interest subsidy program for short-term loans to livestock owners and fishermen.

Higher allocation for urban development

Gujarat spends around 6% of its budget on urban development. It is one of the highest in all of India.

For next year, expenditure on urban development is expected to increase by 19% to Rs 12,639 crore, and about a third of the allocation is for development. Swarnim Jayanti Mukhymantri Shehri Vikas Yojana.

The program aims to provide basic infrastructure facilities in municipal corporations, municipalities and urban authorities.

Increase in grant remuneration

Grant and other taxes on local organizations have been subsumed under the GST. As compensation for the loss of income of municipal and district bodies, the state granted them grant compensation. For the next year, the subsidy for the compensation of the grant has been increased by 10% to Rs 468.1 crore from Rs 426.7 crore in 2020-21.

GST offset

Gujarat relied on GST offset grants during the period 2018-22 to achieve the SGST guaranteed revenue level. In 2021-2022, it is estimated that Gujarat will receive 20% of its own tax revenue in the form of GST offset grants and back-to-back loans.

Thus, beyond June 2022, other sources of government revenue must increase to make up the shortfall.

According to the revised estimates for the current year, the state GST is expected to register an increase of 17% to Rs 42,978 crore from the budget estimate. Revenues from stamp duty and sales tax are expected to increase by 17% and 25% respectively (compared to the budget estimate).

Higher proportion towards subsidies

Gujarat devotes 10% of its budget to subsidies. For the current year, he estimated that he would spend Rs 22,155 crore. This is a 20% increase from the previous year (Rs 18,420 crore).

Energy and petrochemicals receive the highest subsidies, followed by agriculture and cooperation. Other significant subsidies provided by the government of Gujarat include subsidies for food and civil supplies, as well as ports and transport.

Loan collection adds to the public treasury

Gujarat has seen a substantial increase in non-debt capital revenue in 2020-21. Gujarat had estimated that it would receive Rs 265 crore in 2020-21 but Rs 10,123 crore was added to the state treasury during the year.

This was due to Rs 9,958 crore as other miscellaneous capital inflows and Rs 10 crore from divestments from the public sector and other businesses.

Read the full article on Gujarat’s budget on the PRS Legislative Research website.

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