GOVERNMENT OF ODISHA

Mid-Year Analysis of the State Finance

2015-16

FINANCE DEPARTMENT

2

PREFACE

Finance Department has carried out a Mid-Year (H1: April-September) Analysis of State

Finance: 2015-16, on the basis of accounts received from the Principal Accountant General,

Odisha (copy attached). Salient features of the State Finance during H1: FY 2015-16 are as

follows:

Fiscal indicators display a continuation of improvement with Revenue surplus, Fiscal

Surplus and Primary Surplus.

The State Own Revenue (SOR) has registered a robust growth which is contributed by

State Own tax Revenue (SOTR).

State Own Non-Tax Revenue has recorded a positive growth compared to the negative

growth experienced during these six months in the last year.

The share of Plan Expenditure, Capital Outlay and Developmental Expenditure has gone

up impressively in H1: FY 2015-16.

Interest payment to Revenue Receipts Ratio and Debt Stock Ratio are within the

prudential level.

However, the areas of concern that need to be addressed are:

Implication of revenue loss on account of lesser grants from Centre on account of

delinking of Centrally Sponsored Schemes, change in sharing pattern of the CSS and

discontinuation of Sector & State specific grants.

The sluggish growth in both Revenue Expenditure and Capital Outlay.

There is a need to augment both revenue and capital outlay in order to address the need of

developmental expenditure for increased investment in infrastructure and social sector. At the

same time, State Own Revenue is to be augmented to compensate the revenue loss on account of

grants from the Centre.

(P. K. Amat)

Minister, Finance

3

Contents 1 Introduction ........................................................................................................................... 5

2 Review of Trends in Receipts and Expenditure ................................................................. 6

2.1 Analysis of Revenue Receipts ........................................................................................ 6

2.1.1 Analysis of State Own Tax Revenue...................................................................... 6

2.1.2 Analysis of State Non-Tax Revenue ...................................................................... 7

2.1.3 Analysis of State Own Revenue ............................................................................. 8

2.1.4 Analysis of Central Transfer.................................................................................. 8

2.1.5 Analysis of State Total Revenue Receipts ............................................................. 9

2.1.6 Analysis of Composition of Total Revenue Receipts ........................................... 9

2.2 Analysis of Expenditure ............................................................................................... 10

2.2.1 Analysis of Plan and Non Plan Expenditure ...................................................... 11

2.2.2 Analysis of Economic Classification of Expenditure ......................................... 12

2.2.3 Analysis of Functional Classification of Expenditure........................................ 13

2.2.4 Analysis of Department-wise Expenditure Achievement Ratio (EAR) ........... 15

2.2.5 Analysis of Department-wise Expenditure Contribution Ratio (ECR) ........... 16

2.2.6 Analysis of EAR and ECR of Top 10 Departments ........................................... 17

2.2.7 Analysis of Top 10 Departments in ECR and their corresponding EAR ........ 18

2.2.8 Top 10 Departments in EAR and the corresponding ECR ............................... 19

3 Analysis of Fiscal Indicators .............................................................................................. 20

4 Analysis of Rate of Return (RORE) .................................................................................. 21

4.1 Analysis of RORE ............................................................................................................. 21

4.1.1 Major Observations .............................................................................................. 21

4.2 Return on Equity Capital (ROEC) ............................................................................. 26

4.3 Return on Cash Balance Investment Account (ROCBI) .......................................... 26

5 Analysis of Borrowings & Debt Stock ............................................................................... 28

5.1 Analysis of Borrowings ................................................................................................ 28

6 Evaluation of Fiscal Performance in terms of FRBM Act Targets ................................ 31

6.1 FRBM Targets ................................................................................................................... 31

6.2 Achievements ................................................................................................................ 31

7 General Observations on the Fiscal Performance during Mid-Year 2015-16 ............... 32

4

List of Tables

Table No. Title Page

1 Revenue performance for the Mid-Year 2015-16 6

2 State Own Tax Revenue for the Mid-Year 2015-16 7

3 State Non-Tax Revenue for the Mid-Year 2015-16 8

4 Statement of Expenditure for the H1: 2015-16 10

5 EAR & ECR of Top 10 Departments 17

6 Fiscal Indicators 20

7 Return on Equity Capital 25

8 Return on Cash Balance Investment Account 26

9 Net Debt & Other Liabilities 27

List of Charts Chart No. Title Page

I Dispersion of Revenue Receipts H1:2014-15 9

II Dispersion of Revenue Receipts H1:2015-16 9

III Plan and Non-Plan Expenditure H1:2014-15 11

IV Plan and Non-Plan Expenditure H1:2015-16 11

V Composition of Expenditure H1: 2014-15 12

VI Composition of Expenditure H1: 2015-16 12

VII Development and Non-Development Expenditure H1:2014-15 14

VIII Development and Non-Development Expenditure H1:2015-16 14

IX Component wise EAR of All Departments 15

X EAR of Top 10 Departments 16

XI Component wise ECR of All Departments 16

XII ECR of Top 10 Departments 17

XIII Top 10 Departments in ECR and their corresponding EAR 18

XIV Top 10 Departments in EAR and their corresponding ECR 19

XV RORE in Agriculture and Allied Activities 21

XVI RORE in Irrigation 22

XVII RORE in Village and Small Industries 23

XVIII RORE in Roads and Bridges 23

XIX RORE in Roads& Bridges and Road Transport 24

XX RORE in Tourism 24

XXI RORE in Power Sector 25

XXII Average Annual RORE in Economic Sectors 25

XXIII Comparison of Borrowings 29

5

1 Introduction

The Mid-Year (H1) Financial Analysis 2015-16 of the Government of Odisha depicts the

financial position along with accounts of the receipts and disbursements of the Government by

capturing both revenue & capital accounts and the accounts of the Public Debt and liabilities.

The Half Yearly Financial Analysis includes Consolidated Fund, Contingency Fund and Public

Account. The data for the half yearly analysis is taken from the compilation of the accounts of

Receipts and Expenditure of the Government of Odisha by the Principal Accountant General

(Accounts and Entitlements), Odisha. The objective of the analysis is to take compiled financial

data and statements to review the trends in receipts, expenditure and debt stock in relation to the

actuals at the end of the Mid-Financial year 2014-2015 as well as the budget estimate of FY

2015-16. Besides, Mid-Year Financial Analysis 2015-16 is also analysed in comparison to the

parameters set by the Fiscal Responsibility and Budget Management (FRBM) Act, 2005.

The scheme of the analysis is organized as follows. Besides the introduction in Chapter

One, Chapter Two analyses the trends in receipts and expenditure at the end of the Mid-

Financial year 2015-16. Chapter Three makes a comparative analysis of various fiscal indicators.

This is followed by analysis of Return on Investment presented in Chapter Four. Analysis of debt

stock is described in Chapter Five. Chapter Six evaluates the Fiscal Performance in H1: FY

2015-16 in terms of targets set by the FRBM Act, 2005. General Observations on the fiscal

performance are delineated in Chapter Seven.

6

2 Review of Trends in Receipts and Expenditure

2.1 Analysis of Revenue Receipts

Table 1: Revenue performance for the Mid-Year 2015-16 (Rs. Crore)

Items

2014-15 2015-16

B.E. Actual

% of

B.E.

% of

growth

over

previous

year

B.E. Actual % of

B.E.

% of

growth

over

previous

year

1. Own Tax Revenue 19862.65 7839.74 39.47% 11.08% 21280.37 10134.94 47.63% 29.28%

2. Own Non-Tax Revenue 8024.00 2673.99 33.32% -17.43% 9013.56 3143.32 34.87% 17.55%

3. Total Own Revenue (1+2) 27886.65 10513.73 37.70% 2.12% 30293.93 13278.26 43.83% 26.29%

4. Share in Central Taxes 18289.46 7910.44 43.25% 11.02% 19580 10462.06 53.43% 32.26%

5. Grants from Centre 20970.85 7185.72 34.27% 132.22% 21066.57 6354.30 30.16% -11.57%

6. Total transfer from

Centre (4+5) 39260.31 15096.16 38.45% 47.72% 40646.57 16816.364 41.37% 11.39%

7. Total Revenue Receipts

(3+6) 67146.96 25609.89 38.14% 24.83% 70940.50 30094.62 42.42% 17.51%

2.1.1 Analysis of State Own Tax Revenue

State Own Tax Revenue is calculated to be at Rs.21280.37 crore for 2015-16. Against

this, Rs.10134.94 crore has been collected during H1:2015-16 representing 47.63% of the

Budget Estimate and the same has registered a growth rate of 29.28% against the corresponding

period of previous financial year.

Among the components of state own tax revenue, revenues from land, stamps and

registration, state excise, sales tax, taxes on vehicles, taxes and duties on electricity and other

taxes have registered positive growth over the previous financial year (first half). On the

contrary, revenues from professional tax and entry taxes on goods and passengers have shown

negative growth (see Table 2) during H1: FY 2015-16.

Revenues from stamps and registration have recorded highest growth, which is 543.43%

of the previous mid-financial year. The surge in growth rate of stamps and registration is mainly

due to 90.5% realisation of the budget estimate in H1: FY 2015-16.

7

Table 2: State Own Tax Revenue for the Mid-Year 2015-16 (Rs. Crore)

Item of Revenue 2015-16 (BE) Collection up to

Sept. 2014

Collection up to

Sept. 2015

% Growth

over Sept,

2014

% of BE

Professional Tax 186 87.56 83.2 -4.98% 44.73%

Land Revenue 465 166.58 259.73 55.92% 55.86%

Stamps & Registration 1662.37 233.79 1504.25 543.43% 90.49%

State Excise 2300 926.77 1137.04 22.69% 49.44%

Sales Tax 12800.56 4892.07 5485.2 12.12% 42.85%

Taxes on Vehicles 1069.2 386.44 435.61 12.72% 40.74%

Taxes on Goods &

Passengers ( Entry tax) 1914 740.05 730.09 -1.35% 38.14%

Taxes & Duties on

Electricity 844.8 399.07 490.06 22.80% 58.01%

Other Taxes and Duties

(FDT,ET&LT) 38.44 7.43 9.79 31.80% 25.46%

Total-Own Tax Rev. 21280.37 7839.74 10134.98 29.28% 47.63%

2.1.2 Analysis of State Non-Tax Revenue

State own Non-Tax Revenue is Rs.3143.32 during H1: FY 2015-16, which is 34.87% of

the budget estimate. During the same period, actual estimates of state own non-tax revenue have

registered 17.55% growth over the previous financial year. The positive growth in Non-Tax

revenue is mainly attributable to the increase in collection from mining and metallurgical

industries.

Among the Non-Tax revenues, revenues from education, medical, irrigation, non-ferrous

mining and metallurgic industries and others have registered a positive growth over the last

period that is H1: FY 2014-15. But the growth in other components of non-tax revenue like

interest, dividend, water supply and sanitation, housing, forest and wild life over the previous

period is found to be negative (See Table-3). It is observed that the realised collection (first half)

from medium irrigation is 143.59% of the 2015-16 B.E.

8

Table 3: State Non-Tax Revenue for the Mid-Year H1: 2015-16 (Rs. Crore)

Item of Revenue 2015-16 (BE) Collection up to

Sept. 2014

Collection up to

Sept. 2015

% Growth

over Sept, 2014 % of BE

Interest 200.00 85.06 80.96 -4.82% 40.48%

Dividend 1093.00 39.33 17.84 -54.65% 1.63%

Education 30.00 7.69 56.12 629.53% 187.07%

Medical 34.00 21.83 31.67 45.10% 93.16%

Water Supply & Sanitation 75.90 28.44 28.26 -0.63% 37.23%

Housing 15.93 7.82 7.13 -8.79% 44.78%

Forest & Wildlife 35.00 20.89 9.19 -55.98% 26.27%

Major Irrigation. 360.00 58.39 63.37 8.54% 17.60%

Medium Irrigation. 120.00 146.93 172.31 17.28% 143.59%

Minor Irrigation 16.00 4.23 6.20 46.38% 38.73%

Non-Ferrous Mining &

Metallurgical Industries 6626.17 2049.99 2417.98 17.95% 36.49%

Others 407.56 203.39 252.28 24.04% 61.90%

Total Own Non-Tax Rev. 9013.56 2673.99 3143.32 17.55% 34.87%

2.1.3 Analysis of State Own Revenue

Budget estimate of state own revenue for the FY 2015-16 is Rs.30293.93 crore. In H1:

FY 2015-16, total realisation of own revenue is found to be Rs.13278.26 crore, which is 43.83%

of the budget estimate. The growth in state total own revenue is 26.29% over the last mid-fiscal

year.

2.1.4 Analysis of Central Transfer

a. State Share in Central Taxes: This is estimated at Rs.19580 crore for 2015-16. The

actual receipt of Share in Central Taxes in H1: FY 2015-16 is Rs.10462.06 crore,

which is 53.43% of the budget estimate of FY 2015-16. The growth in share in

central taxes for the first half of FY 2015-16 is 32.26%.

9

b. Grants-in-Aid: The receipt of grants from the Centre has been estimated at

Rs.21066.57 crore in 2015-16 (BE). The actual receipt of Grants-in-Aid during H1:

FY 2015-16 is Rs.6354.30 crore, which is Rs.831.42 crore less than the

corresponding period of the previous fiscal year. This decrease in Grants-in-aid is

mainly due to the delinking of various state plans from central assistance.

2.1.5 Analysis of State Total Revenue Receipts

The total revenue of the state for 2015-16 has been estimated at Rs.70940.50 crore.

Against this, the actual realisation in H1: FY 2015-16 is Rs.30094.62 crore which is 42.42% of

the Budget Estimates and the same has registered a growth rate of 17.51% against H1: FY 2014-

15.

2.1.6 Analysis of Composition of Total Revenue Receipts

The Share of Own Tax Revenue in Total Revenue Receipt has significantly increased

from 30.61% in H1: FY 2014-15 to 33.68% in H1: FY 2015-16. The share in central taxes has

also gone up to 34.76% in H1:2015-16, while the share of own non-tax revenue has remained

unchanged. However, the share of Grants from Centre has gone down from 28.06% in H1: FY

2014-15 to 21.11% in H1: FY 2015-16 (see Chart I & II).

OTR: Own Tax Revenue, ONTR: Own Non-Tax Revenue, SCT: Share in Central Taxes, GC: Grants from Centre

10

2.2 Analysis of Expenditure

Table 4: Statement of Expenditure for the H1: 2015-16 (Rs. Crore)

Item

2014-15 2015-16

B.E.

Half Year

ending

Sep.2014

%

of B. E. Growth B.E.

Half Year

ending

Sep.2015

%

of B. E. Growth

1. Non-Plan

Expenditure 37655.51 14114.45 37.48% 22.23% 41049.61 14792.83 36.04% 4.81%

a. Revenue-Out of

which 37498.50 14090.73 37.58% 22.24% 40892.05 14779.93 36.14% 4.89%

i. Interest payment 4729.18 785.92 16.62% -0.04% 4350.00 821.16 18.88% 4.48%

ii. Pension 7810.58 3514.71 45.00% 20.47% 8593.20 3349.02 38.97% -4.71%

b. Capital Outlay* 24.35 3.55 14.58% -52.09% 22.56 2.22 9.84% -37.46%

c. Loans & Advances 132.66 20.17 15.20% 49.41% 135.00 10.68 7.91% -47.06%

2. State Plan

Expenditure 38810.00 12209.13 31.46% 89.49% 40150.00 15146.30 37.72% 24.06%

a. Revenue 24809.42 7739.77 31.20% 100.35% 24572.06 9176.70 37.35% 18.57%

b. Capital Outlay 13588.30 4422.11 32.54% 71.49% 15119.93 5969.60 39.48% 34.99%

c. Loans & Advances 412.28 47.25 11.46% 0.00% 458.01 0.00 0.00% 0.00%

3. Central Plan

Expenditure 609.4208 155.56 25.53% 7.70% 349.55 59.39 16.99% -61.82%

a. Revenue 564.34 155.37 27.53% 14.32% 343.75 59.39 17.28% -61.77%

b. Capital Outlay 45.08 0.19 0.42% -97.77% 5.80 0.00 0.00% -100.00%

c. Loans & Advances 0.00 0.00 0.00% 0.00% 0.00 0.00 0.00% 0.00%

4. Centrally

Sponsored Plan

Expenditure

9.1548 0.68 7.43% -99.93% 31.91 0.68 2.13% 0.00%

a. Revenue 9.15 0.68 7.43% -99.93% 31.13 5.37 17.25% 689.55%

b. Capital Outlay 0.00 0.00 0.00% -100.00% 0.78 0.00 0.00% 0.00%

c. Loans & Advances 0.00 0.00 0.00% 0.00% 0 0.00 0.00% 0.00%

5. Total Plan

Expenditure (2+3+4) 39428.57 12365.37 31.36% 62.09% 40531.46 15211.06 37.53% 23.01%

a. Revenue 25382.92 7895.82 31.11% 56.99% 24946.94 9241.46 37.04% 17.04%

b. Capital Outlay 13633.38 4422.30 32.44% 70.25% 15126.51 5969.60 39.46% 34.99%

c. Loans & Advances 412.28 47.25 11.46% 0.00% 458.01 0.00 0.00% 0.00%

6. Total Expenditure

(1+5) 77084.08 26479.82 34.35% 38.08% 81581.07 30003.88 36.78% 13.31%

a. Revenue 62881.42 21986.55 34.97% 32.80% 65838.99 24021.38 36.49% 9.25%

b. Capital Outlay 13657.72 4425.85 32.41% 69.90% 15149.07 5971.82 39.42% 34.93%

c. Loans &advances 544.94 67.42 12.37% 350.67% 593.01 10.68 1.80% -84.16%

Notes: * Capital Expenditure without Debt Repayment and Loans & Advances

Table-4 delineates the composition of expenditure in terms of economic classification

that includes revenue expenditure, capital outlay and loans and advances. These classifications

11

are further categorised into plan and non-plan expenditure. In comparison to the corresponding

period of the previous financial year, the total expenditure (Rs.30003.88 crore) during H1:

2015-16 has registered a growth of 13.31%.

2.2.1 Analysis of Plan and Non Plan Expenditure

The share of Plan Expenditure in total expenditure has gone up from 46.70% in H1:2014-

15 to 50.70% in H1: 2015-16, which is mainly due to the increase in state plan expenditure by

24.06%. Consequently, the Non Plan Expenditure (including grants-in-aid) in total expenditure

has declined to 49.31% in H1:2015-16 from 53.30% incurred in H1:2014-15 (see Chart III &

IV). The ratio of Plan to Non-Plan Expenditure has gone up from 87.40% in H1: 2014-15 to

102.90% in H1:2015-16.

PE: Plan Expenditure, NPE: Non Plan Expenditure

a. Non-plan expenditure in H1: FY 2015-16 is Rs.14792.83 crore against the budget

estimate of Rs.41049.61 crore. There has been a growth of 4.81% in non-plan

expenditure over the first half of the previous year.

b. Plan Expenditure (SP, CP & CSP) has been estimated at Rs.40531.46 crore for 2015-16.

The total plan expenditure in H1: FY 2015-16 comes to Rs.15211.06 crore which is

37.53% of the budget estimate. Actual plan expenditure in H1: FY 2014-15 was

Rs.12365.37 crore, which was 31.36% of the budget estimate for 2014-15. The growth in

plan expenditure in H1: FY 2015-16 compared to H1: FY 2014-15 is 23.01%. This

impressive growth is on account of inclusion of the Central Share of the restructured 66

CSS in the State Plan.

12

c. State Plan provision of Rs.40150.00 crore has been made in the BE for 2015-16. As

against this, expenditure during H1: 2015-16 under State Plan has been Rs.15146.30

crore, which is 37.72% of the budget estimate. State Plan expenditure has shown a

growth of 24.06% over the corresponding period of previous year, which is mainly on

account of inclusion of the restructured 66 CSS in the State Plan.

2.2.2 Analysis of Economic Classification of Expenditure

Against the budgeted capital outlay of Rs.15149.07 crore for 2015-16, Rs.5971.82 crore

has been expended in H1: FY 2015-16. Compared to the expenditure incurred in H1: 2014-15,

capital expenditure in H1: 2015-16 has registered a higher growth of 34.93%. But, it constitutes

only 39.42% of the budget estimate.

The share of Revenue expenditure has come down to 80.06% in H1-2015-16 from its

earlier level that is 83.03% in H1:2014-15. In contrast to this, the share of capital outlay in total

expenditure has increased from 16.71% in H1:2014-15 to 19.90% in H1:2015-16 (see Chart V &

VI). As a result, capital outlay to revenue expenditure ratio has gone up from 20.13% in

H1:2014-15 to 24.86% in H1:2015-16. The decline in the revenue expenditure and increase in

capital outlay is good for an economy as the proportion of development expenditure is more in

capital outlay. The loans and advances component has declined from 0.25% in H1-2014-15 to a

meagre 0.04% in H1:2015-16.

RE: Revenue Expenditure, CO: Capital Outlay, LA: Loans & Advances

13

The total Revenue expenditure has been estimated at Rs.65838.99 crore. Against this,

Rs.24021.38 crore was incurred in H1: 2015-16 which constitutes 36.49% of the budget

estimate.

(i) There is a provision of Rs.4350.00 crore towards Interest Payment. Out of this,

Rs.821.16 crore is utilised constituting 3.42% of the aggregate revenue expenditure.

Interest Payment to Revenue Receipts (IPRR) ratio is at a comfortable level of 2.73%.

Growth of expenditure on interest payment during H1: FY 2015-16 over the

corresponding period of previous year is 4.48%.

(ii) Similarly, expenditure on Pension in H1: FY 2015-16 has been Rs.3349.02 crore against

the estimated outgo of Rs.8593.20 crore. The actual outgo on pension constitutes

13.94% of total revenue expenditure. Growth of expenditure on pension during H1: FY

2015-16 over the corresponding period of previous year has declined by 4.71%.

2.2.3 Analysis of Functional Classification of Expenditure

The classification of total expenditure into developmental and non-developmental

components pertains to the functional classification of total expenditure. Expenditure incurred

for socio-economic development is regarded as development expenditure and spending on

general services is considered as non-development expenditure.

a. For the current year, an outlay of Rs.29092.15 crore has been earmarked towards Social

Sector which is about 35.92% of total budgeted expenditure excluding debt repayment.

Out of this, Rs.10719.10 crore has been spent up to September’15 constituting 36.85% of

the budget estimate. In comparative terms, the rate of growth over the corresponding

period of the previous year is 8.55%.

b. For the current year, an outlay of Rs.30624.93 crore has been assigned towards

Economic Sector, which is about 37.81% of total budgeted expenditure excluding debt

repayment. Out of this, Rs.7409.08 crore has been spent up to September’15 constituting

24.20% of the budget estimate. In comparative terms, the rate of growth over the

corresponding period of the previous year is 24.31%.

14

c. An outlay of Rs.59717.08 crore is estimated for Development Sector i.e. both Social and

Economic Sector in 2015-16. This is about 73.20% of the total budgeted expenditure

excluding debt repayment. An amount of Rs.23089.51 crore is utilised up to

September’15 constituting 38.66 % of the budget estimate of FY 2015-16.

The Developmental Expenditure constitutes 77.83% of total expenditure in H1:2015-16

as against 74.47% in H1:2014-15 (see Chart VII & VIII). This is due to the significant growth in

economic services, both in revenue (24.31%) and capital (36.33%) accounts as compared to the

previous period. As a result, the share in Non-development expenditure has come down to

22.17% in H1:2015-16 from 25.53% in H1:2014-15. It can also be noted that the growth in

general services in revenue account from the previous period is -2.9% which significantly lowers

the share of non-development expenditure in total expenditure. The ratio of Development to non-

development Expenditure has gone up from 2.92 in H1: 2014-15 to 3.51 in H1:2015-16.

DE: Developmental Expenditure, NDE: Non Developmental Expenditure

15

2.2.4 Analysis of Department-wise Expenditure Achievement Ratio (EAR)

The actual expenditure in H1: FY 2015-16 relative to the budgeted expenditure of 2015-

16 is defined as Expenditure Achievement Ratio (EAR). The EAR for the total expenditure by

all departments taken together is reported at 36.98% in H1: FY 2015-16. For this period, EAR in

Non Plan Expenditure by all departments is reported at 36.60%. EAR in Plan Expenditure for all

departments is estimated to be 37.40%. It is noted that EAR is highest at 37.60% for State Plan

Expenditure in this period. Both Central Plan and Central Sponsored Plan have registered a very

low EAR at 17% and 16.77% respectively during this period (See Chart IX).

Chart IX: Component wise EAR of All Departments

The EAR for top 10 Departments is presented in the figure below (see Chart X). The

EAR is highest for Labour & Employment (77%), followed by Employment, Technical

Education & Training Department (51%) and Works Department (49%). The lowest EAR is

observed in case of Information Technology (3.50%) and Department of Tourism & Culture

(18.40%).

16

Chart X: EAR of Top 10 Departments

L&E: Labour and Employment, ETET: Employment and Technical Education and Training Department, Works:

Works Department, PR: Panchayati Raj Department, Law: Law Department, Agriculture: Agriculture Department,

PG&PA: Public Grievances and Pension Administration Department, FARD: Fisheries and Animal Resources

Development Department, PA: Parliamentary Affairs Department, H&FW: Health and Family Welfare Department

2.2.5 Analysis of Department-wise Expenditure Contribution Ratio (ECR)

The actual expenditure incurred by a particular department relative to the total

expenditure made by all departments in H1: FY 2015-16 is defined as Expenditure

Contribution Ratio (ECR). The total expenditure incurred by all the departments H1: FY 2015-

16 is mainly driven by The Non Plan and State Plan Expenditure. Their respective shares to total

expenditure incurred are reported at 52.11% and 47.69% respectively (See Chart XI).

Chart XI: Component wise ECR of All Departments

17

The ECR is highest for Finance Department (18%), followed by School & Mass

Education Department (12.50%) and Panchayati Raj (10.70%) Department.

The ECR for the top 10 Departments is shown in the figure below (see Chart XII). These

Top 10 Departments in terms of ECR contribute 80% of the total expenditure made by all the

departments (See Chart XII).

Chart XII: ECR of Top 10 Departments

Finance: Finance Dept., S& ME: School& Mass Education Dept., PR: Panchayati Raj Dept., WR: Water Resource

Dept., Works: Works Dept., RD: Rural Development, H&FW: Health and Family Welfare Dept., Home: Home

Dept., Agriculture: Agriculture Dept., W&CD: Women & Child Development

2.2.6 Analysis of EAR and ECR of Top 10 Departments

A comparative analysis of top 10 Departments both in terms of EAR and ECR is

described below (See Table 5).

Table 5: EAR & ECR of Top 10 Departments

Department EAR Department ECR

L&E 76.78% Finance 17.97%

ETET 51.16% S&ME 12.48%

Works 49.00% PR 10.69%

PR 48.06% WR 7.51%

Law 45.20% Works 6.64%

Agriculture 44.81% RD 6.58%

PG&PA. 42.46% H&FW 4.96%

FARD 41.57% Home 4.61%

PA 40.89% Agriculture 4.42%

H&FW 40.61% W&CD 3.76%

18

2.2.7 Analysis of Top 10 Departments in ECR and their corresponding EAR

A comparative analysis is carried out for the top 10 Departments in terms of ECR

with their corresponding EAR to examine the link between these two ratios (See Chart

XIII).

Chart XIII: Top 10 Departments in ECR and their corresponding EAR

19

2.2.8 Top 10 Departments in EAR and the corresponding ECR

Similarly, a comparative analysis is carried out for top 10 Departments in terms of

EAR with their corresponding ECR (See Chart XIV).

Chart XIV: Top 10 Departments in EAR and their corresponding ECR

20

3 Analysis of Fiscal Indicators

Table 6: Fiscal Indicators (Rs. In Crore)

Items 2014-15 2015-16

BE September BE September

1. Interest Payment 4729.18 785.92 4350.00 821.16

(as % of Revenue Receipt) 7.04% 3.07% 6.13% 2.73%

2. Revenue Deficit(-)/Surplus(+) 4265.54 3623.34 5101.51 6073.24

{as % of GSDP (annualized)} 1.31% 2.22% 1.47% 3.49%

3. Fiscal Deficit(-)/Surplus(+) -9696.83 -812.29 -10400.28 123.79

{as % of GSDP (annualized)} -2.98% -0.50% -2.99% 0.07%

4. Primary Deficit(- ) /

Surplus(+) -4967.65 -26.37 -6050.28 944.95

{as % of GSDP (annualized)} -1.52% -0.02% -1.74% 0.54%

a. Fiscal Deficit has been budgeted at Rs.10400.28 crore for 2015-16. At the end of

September, 2015, there is a Fiscal Surplus of Rs.123.79 crore, whereas, at the end of the

corresponding period of the previous year there was Fiscal Deficit of Rs.812.29 crore.

Emergence of Fiscal Deficit is indicative of the fact that the revenue surplus generated

during the period under reference has been fully utilised towards capital expenditure.

Fiscal Deficit Ratio (FDR) has improved from (-) 0.50% in H1:2014-15 to (+) 0.07% in

H1:2015-16.

b. Revenue Surplus has been estimated at Rs.5101.51 crore for 2015-16. In H1: 2015-16,

there is a Revenue Surplus of Rs.6073.24 crore, whereas, in H1: 2014-15 it was

Rs.3623.34 crore. Revenue Deficit/Surplus Ratio (RDR) has improved from (+) 2.22%

in H1:2014-15 to (+) 3.49% in H1:2015-16.

c. Primary Deficit has been expected to be Rs.6050.28 crore in 2015-16. In H1: 2015-16,

there is Primary Surplus of Rs.944.95 crore whereas in H1:2014-15, Primary Deficit was

Rs.26.37 crore. Primary Deficit Ratio (PDR) has improved from (-) 0.02% in H1:2014-

15 to (+) 0.54% in H1:2015-16.

d. Interest Payment to Revenue Receipt (IPRR): IPRR has improved from 3.07% in

H1:2014-15 to 2.73% in H1:2015-16.

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4 Analysis of Rate of Return (RORE)

4.1 Analysis of RORE

Return on Revenue Expenditure (RORE) is a measure of cost efficiency in the

economic sector. As a performance measure in economic sector, RORE is defined as non-tax

revenue receipts relative to revenue expenditure in a particular economic sector.1 RORE is

calculated at both aggregated and disaggregated level for the period FY 2010-11 to FY 2014-15.

RORE is also computed for H1: 2015-16.

4.1.1 Major Observations

RORE in Agriculture and Allied Activities has been declining since FY 2010-11 (see

Chart XV). It is observed to be the lowest at 0.79% in H1: FY 2015-16.

Among the subsectors of Agriculture and Allied Activities, RORE (see Chart XV) on

forest and wild life (FWILD) and other agricultural programs (OAPR) is highest while it

is lowest in case of crop husbandry (CRPHUS) and animal husbandry (ANIHUS).

Chart XV: RORE in Agriculture and Allied Activities

CRPHUS: Crop Husbandry, ANIHUS: Animal Husbandry, FISH: Fisheries, FWILD: Forestry and Wild Life,

COOP: Co-operation, OAGRPR: Other Agricultural Programme.

1 RORE is mainly a Financial Measure which does not capture the positive externalities generated from Revenue

Expenditure made by the Government.

22

RORE (see Chart XVI) in case of major and medium irrigation (MAMIR) is much higher

than that of the minor irrigation (MINIR). In H1: FY 2015-16, the RORE is highest for both the

major and medium irrigation and for the irrigation sector at 82.80% and 52.5% respectively as

compared to previous periods.

Chart XVI: RORE in Irrigation

MAMIR: Major and Medium Irrigation, MINIR: Minor Irrigation.

RORE (see Chart XVII) in the case of village and small scale industries has slightly

slowed down from 0.35% in 2010-11 to 0.11% in 2014-15. However, it has shown a reversal

trend with a peak of 0.53% in H1: FY 2015-16.

23

Chart XVII: RORE in Village and Small Industries

RORE (see Chart XVIII) in roads and bridges has been declining since FY 2010-11. In

H1: FY 2015-16, it has gone up to 6.21% which is twice of the RORE of FY 2014-15.

Chart XVIII: RORE in Roads and Bridges

The RORE of combined Road & Bridges and Road Transport Departments gives similar

trends as of Road and Bridges for the study period. RORE has improved to 6.21% in H1: FY

2015-16 as compared to FY 2013-14 & FY 2015-16 ( See Chart XIX).

24

Chart XIX: RORE in Roads& Bridges and Road Transport

Huge variation in RORE is observed in tourism sector during the analysis period.

However, it has shown improvement in FY 2014-15 and H1: FY 2015-16 (See Chart-XX below).

Chart XX: RORE in Tourism

RORE in Power Sector also exhibits high variation over the periods (see Chart XXI).

However, it has shown improvement in H1: FY 2015-16.

Chart XXI: RORE in Power Sector

25

The average RORE from FY 2010-11 to H1: FY 2015-16 is calculated for economic

services sectors. The average RORE in irrigation is the highest followed by power sector and

agriculture & allied activities. The average RORE for economic sector (at aggregated level) is

calculated at 11.27% which indicates that during these five years cost incurred in the economic

sector through the revenue expenditure is covered by 11.27%.

Chart XXII: Average Annual RORE in Economic Sector

AGA: Agriculture and Allied Activities, IRR: Irrigation, VILSSI: Village and Small Industries, ROAD: Roads and

Bridges, RDTRN: Roads& Bridges and Road Transport, TOURSM: Tourism, POWER: Power Sector.

26

4.2 Return on Equity Capital (ROEC)

Equity (Share) Capital is the paid up capital infused by the State Government in Statutory

Corporations (3 nos.), Govt. Companies (84 nos.), Joint Stock Companies (23 nos.), Co-

operative Societies (31 nos.) and Rural Banks (3 nos.) aggregating 142 entities. The Return on

Equity Capital (ROEC) is measured by the dividend received as proportion outstanding equity

capital. In FY 2014-15, ROEC has increased by 2.38 times over FY 2013-14 because of more

dividend pay-out by the government Companies. The ROEC is calculated at 30.71% in FY 2014-

15 as against 13.67% in FY 2013-14.

Table 7: Return on Equity Capital

Year

Equity(Share) Capital

(Rs.Crore) Dividend (Rs.Crore) ROEC

2010-11 2190.37 101.58 4.64%

2011-12 2908.07 286.23 9.84%

2012-13 2964.28 564.53 19.04%

2013-14 3308.79 452.4 13.67%

2014-15 3504.87 1076.44 30.71%

4.3 Return on Cash Balance Investment Account (ROCBI)

Table 8: Return on Cash Balance Investment Account

Year

Cash Balance in Investment Account

(Rs. Crore

Interest Realised

(Rs. Crore) Return

2010-11 10003 227 2.27%

2011-12 11488 549 4.78%

2012-13 12865 563 4.38%

2013-14 9499 624 6.57%

2014-15 9994 311.4 3.12%

The return on Cash Balance on Investment Account (ROCBI) is measured by interest

realised over cash balance in investment account. Cash Balance on Investment Account includes

27

Cash Balance, Investment from Cash Balance (G-Sec & T-Bills) and other Cash Balances.

Others Cash Balances include cash with department officers, cash in both sinking fund and

guarantee redemption fund. The interest realised includes interest on 14 Days Treasury Bills

rediscounted during the year. ROCBI is reduced to 3.12% in FY 2014-15 as against 6.57% in FY

2013-14 because of very high deposits with R.B.I at the end of FY 2014-15.

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5 Analysis of Borrowings & Debt Stock

Table 9: Net Debt & Other Liabilities (Rs. Crore)

Items

2014-15 2015-16

B. E. Sept., 2014 B. E. Sept., 2015

1. Public Debt 7640.22 -383.65 9093.68 128.31

i. Loans & Advances from Central Government 1444.51 -59.82 936.94 329.22

ii. Internal Debt 6195.71 -323.83 8156.74 -200.91

2. Contingency Fund 0.00 -26.65 0.00 -8.39

3. Public Account 2056.61 1097.38 1306.62 -849.92

i. State Provident Fund 1000.00 115.73 800.00 258.24

ii. Others 1056.61 981.65 506.62 -1108.16

4. Cash Balance 0.00 -125.21 0.00 -606.21

5. Total Debt & Other Liabilities {Deficit (-)/ Surplus(+)} 9696.83 561.87 10400.30 -1336.21

6. Net Debt (1+3.i) {increase (+) / Decrease (-)} 8640.22 -267.92 9893.68 386.55

5.1 Analysis of Borrowings

The Total Public Debt (Borrowings) during H1: FY 2015-16 consists of net loans &

advances from the Central Government, net internal borrowing and net borrowing from State

Provident Fund. Net internal Borrowing is from NABARD, LIC, National Co-Operative

Development Corporation (NCDC), Special Securities issued to NSSF of Central Government,

State Development loan (market borrowing) and borrowing from other institutions.

a. Loans & Advances from Central Government: The progressive receipt on account of

loans & advances from the Central Government is Rs.586.08 crore during H1: FY 2015-

16. Considering the total repayment of Rs.256.86 crore during the same period, the net

loans & advances from the Central Government is Rs.329.22 crore

b. Internal Debt (Borrowings): The progressive receipt on account of internal debt is

Rs.942.36 crore during H1: FY 2015-16. Considering the total repayment of Rs.1143.27

crore on account of internal debt during the same period, the net repayment on account of

internal debt is Rs. 200.91 crore. During H1: FY 2015-16, Rs.726.16 crore repayments is

made on account of both 6.20% Sate Development Loan in 2015 and 7.77% Sate

29

Development Loan 2015. There has been no fresh borrowing through SDL during these

six months. Net borrowing from NABARD has been Rs.537 crore and Rs.7.36 crore from

NCDC. Borrowing through Special Securities issued to NSSF of Central Government

has been at Rs.203.91 crore with a repayment of Rs.221.83 crore, hence, net repayment

of Rs.17.92 crore.

c. State Provident Fund: The progressive receipt on account of State Provident Fund is

Rs.1388.38 crore during H1: FY 2015-16. Considering the repayment of Rs.1130.16

crore during the same period, the net borrowing from State Provident Fund has been

Rs.258.24 crore.

d. Public Debt (Borrowings): As a result, the progressive receipt on account of public debt

is Rs.1528.45 crore during H1: FY 2015-16. Considering the total repayment of

Rs.1400.14 crore on account of public debt during the same period, the net receipt on

account of public debt is Rs.128.31 crore. Besides, the net receipt from State Provident

Fund has been Rs.258.24 crore during H1: FY 2015-16. Therefore, the net debt incurred

during H1: FY 2015-16 aggregates at Rs.386.55 crore which is mainly contributed by

borrowing from NABARD and State Provident Fund. The net borrowing of Rs.386.55

crore constitutes 3.91% of the budget estimate of borrowing at Rs.9893.68 crore.

The comparison of major components of Public Debt (borrowings) is given below (see

Chart XXIII).

30

Chart XXIII: Comparison of Borrowings (Rs. Crore)

e. Outstanding Debt Stock: Because of increase in debt stock of Rs.386.55 crore during

H1: 2015-16, the outstanding debt stock has increased from Rs. 43273.38 crore at the end

of FY 2014-15 to Rs.43659.93 crore in H1: FY 2015-16.

31

6 Evaluation of Fiscal Performance in terms of FRBM Act Targets

6.1 FRBM Targets

a. To generate Revenue Surplus in FY 2015-16.

b. Fiscal Deficit is to be contained at 3% of GSDP in FY 2015-16.

c. Interest payment as a percentage of revenue receipt is to be limited to 15% in FY 2015-

16.

d. Outstanding Debt stock to GSDP ratio is to be maintained within 25% in FY 2015-16.

6.2 Achievements

a. The State finance continues to witness Revenue Surplus since 2005-06. Revenue Surplus

is reported at Rs.6073.24 crore during H1: FY2015-16. The annualised Revenue Surplus

Ratio is recorded at 3.49%.

b. Fiscal Surplus recorded during H1: FY 2015-16 is to the tune of Rs.123.79 crore, which

is (+) 0.07% of GSDP.

c. Interest payments to Revenue Receipts (IPRR) ratio is reported at 2.73% during H1:

FY2015-16.

d. The Debt Stock Ratio at the end of H1: FY 2015-16 is worked out at 12.54% of GSDP

and 72.54% of the total Revenue Receipts (annualised).

32

7 General Observations on the Fiscal Performance during Mid-Year 2015-

16

a. The State Own Revenue (SOR) has registered a robust growth of 26.29% in the H1:

FY 2015-16 over H1: FY 2014-16. It has achieved 44% of the Budget Estimate.

b. The growth in SOR is mainly driven by State Own tax Revenue (SOTR) that has

exhibited 29.28% growth in the H1: FY 2015-16 as against 11.08% growth recorded

in H1: FY 2014-16. The SOTR has achieved 47.63% of the Budget Estimate as

against achievement of 39.47% in H1: FY 2014-15.

c. The growth in SOTR is mainly driven by the rise in Stamps & Registration, State

Excise Value added Tax and Taxes on Vehicles.

d. The share of SOTR in total revenue receipts has gone up from 33.68% in H1: FY

2015-16 as compared to 30.61% in H1: FY 2014-15.

e. State Own Non-Tax Revenue has posted a growth of 17.55% which is well compared

with the negative growth experienced during these six months in the last year. The

impressive growth is mainly attributable to the increase in collection of revenue from

Mining Sector, witnessing a growth of 18%.

f. However, the growth of total expenditure has shown a modest growth of 13.31% in

H1: FY 2015-16 as compared to 34.35% growth in H1: FY 2014-15.

g. The lower growth in total expenditure is mainly explained by a lower growth in non-

plan component (4.81%) in H1: FY 2015-16 as compared to 22.23% growth in H1:

FY 2014-15.

h. The growth in plan component has also slowed down to 23% in H1: FY 2015-16 as

compared to 62 % growth in H1: FY 2014-15.

i. The growth in both revenue and capital outlay have been distinctly less than the

growth in previous year.

33

j. The shares of plan expenditure and capital outlay to total expenditure have increased

to 50.70% and 20% in H1: FY 2015-16 from 46.70% and 16.70% in H1: FY 2014-15

respectively.

k. The Social Sector expenditure has shown a low growth rate of 8.55% while the

growth in the economic sector has been 28.87%. As a result, the growth in the

Developmental Sector has been recorded at 18.57%.

l. The share of developmental expenditure in total expenditure has gone up to 77.83% in

H1: FY 2015-16 as compared to 74.47 % in H1: FY 2014-15.

m. The Expenditure Achievement Ratio (EAR) for all the forty departments has been at

37% in H1: FY 2015-16.

n. The EAR is highest for Labour and Employment (77%), followed by Employment

&Technical Education and Training Department (51%) and Works (49%)

Department.

o. Finance Department (18%), followed by School & Mass Education Department

(12.50%) and Panchayati Raj (10.70%) Department are the top three departments in

terms of contribution to the total departmental expenditure. These Top 10

Departments contribute 83.12% of the total expenditure made by all the departments.

p. All important fiscal indicators i.e., IPRR, Revenue Surplus Ratio, Fiscal Surplus

Ratio and Primary Surplus Ratio have improved in H1: FY 2015-16 as compared to

H1: FY 2014-15.

q. The Return on Revenue Expenditure (RORE) which measures cost efficiency in the

economic sector is calculated at 11.27% indicating a low cost coverage ratio in the

economic sector. RORE is observed to be highest at 38% for major and medium

irrigation sector and followed by power sector.

r. Return on Equity Capital (ROEC) has increased during 2012-13 and 2013-14 because

of more dividend pay-out by the government Companies.

s. The return on Cash Balance on Investment Account (ROCBI) is highest at 6.57% in

FY 2013-14 indicating better management of Cash Balances as compared to the

previous three years.

34

t. The net borrowing during H1: FY 2015-16 is at Rs.386.55 crore, which is mainly

sourced by borrowing from NABARD and State Provident Fund. The net borrowing

of Rs.386.55 crore constitutes 3.91% of the budget estimate of borrowing at

Rs.9893.68 crore.

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