Rajasthan Budget Analysis

Ahead of the Full Budget for FY-25 that would be presented by FM Smt. Nirmala Sitharaman, some states have started to present their budgets. One of the latest states to present its budget was India's largest state, Rajasthan. The Rajasthan budget was presented by Smt. Diya Kumari, the Deputy Chief Minister of Rajasthan in the Bhajanlal Sharma government. Since the budget is the first full-time budget of the new Rajasthan BJP government, it is inviting a range of analyses from social as well as economic points of view in the national dailies. This article would like to cover the salient features of the budget of Rajasthan along with providing an economic analysis for the same. 

Rajasthan is India's largest state by area. Rajasthan's economy stands at 7th position in the country with a GSDP of $15.7 billion, which is just behind West Bengal whose GSDP is $17.19 billion. Rajasthan's economy is primarily driven by agriculture, mining & tourism. As per the 2022-23 data for Rajasthan's economy, the per capita income of Rajasthan is Rs. 1,56,000. The sectoral contribution of Rajasthan's economy is quite interesting; as per 2022 data, Agriculture contributes 28.95% of the economy, Industry contributes 27.31% of the economy & Services contributes the rest 41.93% of its economy. The major sector in services that has the lion's share of contribution is the tourism sector. The salient features of the economy of Rajasthan can be referred to here. 

However, despite being a good performing state as far as economic indicators are concerned, there are some weaknesses that impact the economy of Rajasthan as a whole. Some of them being Export Preparedness; as per the EPI report launched by NITI Aayog in 2022, Rajasthan is at the 13th position in the EPI index, and even states that don't necessarily have very huge GSDPs like Madhya Pradesh are ranked above it. Rajasthan's economy also suffers from issues of debts; the Gross Fiscal Deficit of 5.2% as per the data of 2022-23 is one of the highest in the nation across the states. This issue was also flagged in the RBI state finances report of 2022. Among several other issues are unemployment and water issues. The BE of FY-24 has pegged the revenue to be at 2.64 lakh cr & expenditure at 2.9 lakh cr & an estimated fiscal deficit of 3.93%, which has the promise to improve the economic structure of the state. 

The importance of agriculture to Rajasthan's economy can be gauged by the fact that the finance minister separately presented the agriculture budget. Some salient features under the same are: farmers giving loan repayment having 2% benefit, coverage for 1.45 lakh farmers will be provided with 24*7 electricity access by the year 2027, 650 cr for promotion of horticulture, Knowledge enhancement program where 100 farmers would be sent to Israel to learn new technologies & formation of 500 new FPOs. The first and last salient features mentioned would help the state to improve the credit structure that would allow greater liquidity in the rural areas and subsequent growth. These steps are promising in nature as they would help in boosting agricultural productivity for the state in the longer run & creating new skilled opportunities for the state youth. 

The other salient features of the budget in Rajasthan are the development of Kathushyam Corridor for 200 crore, 4 lakh recruitment into jobs, greenfield expressways, Rajasthan Mandapam, Training of 1.5 lakh youth, VAT on CNG & PNG reduction from 14 to 10%, tourism board constitution & CM Swanidhi Yojana for street vendors. The development of Kathushyam Corridor would significantly boost the tourism income of Rajasthan in addition to creating a localized economy. The schemes like Rajasthan Mandapam and reduction of VAT on CNG can potentially improve the overall tourism in the state. The remaining schemes are ambitious in nature and it remains to be seen how they would be implemented. The biggest plus point is the 8% budget allocation to healthcare which can not only improve the healthcare structure of Rajasthan but can act as a potential to improve medical tourism facilities in the state. 

If only the major talking points of the budget are taken into consideration, then the Bhajanlal Sharma-led government has focused primarily on agriculture & tourism sectors which are very crucial for the development of Rajasthan. However, the risk diversification of the economy has also happened where the finance minister has announced a slew of schemes for green energy which can potentially play a game-changing role for the private sector in the state & spur investments in this sector. 

Overall, the first budget presented by Smt. Diya Kumari & the Bhajanlal Sharma government is impressive & forward-looking in nature. However, the state also has to develop a mechanism for debt financing which can act as a potential game-changer in realizing the vision of a $350 billion economy for the state as envisaged by the DCM in her budget speech.