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Tuesday, April 20, 2021

Explained: How the Covid-19 pandemic impacted Gujarat budget

Gujarat budget 2021: In the coming fiscal, the state proposes to raise its spending slightly more for health and family welfare, education, social welfare and transportation.

Written by Avinash Nair , Edited by Explained Desk | Ahmedabad |
Updated: March 20, 2021 12:12:29 pm
Gujarat Deputy Chief Minister Nitin Patel presents the Gujarat budget in the state Assembly on March 3 (Twitter/@Nitinbhai_Patel)

In the past year, Gujarat saw over 2.7 lakh Covid-19 cases and over 4,300 deaths. The pandemic lockdown resulted in job and revenue losses across the board. The state recently concluded the local body elections and is due for the assembly elections next year. In this backdrop, we try to analyse how the pandemic has impacted the Rs 2.27 lakh crore Gujarat state budget for 2021-22.

How has Covid impacted allocations made for various sectors?

Though the government allocated Rs 9,742 crore more to be spent during the coming financial year, certain sectors like water supply, sanitation, housing and urban development; agriculture, irrigation and rural development; and energy, industry and minerals, saw development expenditure dipping between 0.76 percent to almost 6.5 percent, when compared to original provisions made in 2020-21 budget.

However, during the coming fiscal, the state proposes to raise its spending slightly more for health and family welfare, education, social welfare and transportation.

What has been the impact of Covid-19 on the state’s fiscal discipline and public debt position?

In the budget, the government clearly states that Gujarat’s GSDP “witnessed a considerable slide” during financial year 2020-21 due to the nationwide lockdown caused by Covid-19 pandemic and other related restrictions. Gujarat’s GSDP which grew by 17.7 in 2012-13 had already considerably slowed down to 9.8 per cent in 2019-20. Covid has pulled this growth of GSDP further down, and it is expected to grow only at 0.6 per cent as per advance estimates for 2020-21.

The public debt of state which stood at Rs 2.67 lakh crore in March 2020 is expected to cross Rs 3 lakh crore by March 2021. This debt will be 18.14 per cent of GSDP (March 2021), much higher from the 16.19 per cent a year ago. This public debt of the state is set to rise to Rs 3,27,134 crore by the end of 2021-22 and cross Rs 4.1 lakh crore by 2023-24.

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Central funding

The money that Gujarat received as grant-in-aid and contribution from central government dipped by 32 per cent when compared to 2019-20 when the quantum stood at Rs 25,500 crore. This, officials said, was due to the Centre’s own revenues being adversely affected by the pandemic. In 2020-21, the state will receive only Rs 17,370 crore of the central grants, and in 2021-22, this support from the Centre will further fall to Rs 16313 crore.

MLA grants

The annual allocation of grant of Rs 1.5 crore provided to the MLAs for their respective constituencies was suspended due to Covid-19 pandemic. With the improvement in the economic condition of the state, the MLA grant will be resumed from 2021-22. The finance minister made it clear that the government has no plans to reinstate the grant which was not given to the MLAs due to Covid.

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