Mutual Funds Commodities Research Tax Planning IPO Our Team Contact Us  

| More

CRISIL Ratings: Social welfare spend of states to hit a decadal high this fiscal

Posted On: 2023-08-23 16:39:53 (Time Zone: IST)

Spending on social welfare schemes by the top 11 Indian states1 - accounting for 75-80% of aggregate gross state domestic product (GSDP) - is expected to reach a decadal high of over 1.7% of GSDP, or ~Rs 4 lakh crore, according to the budget estimates (BE) of these states for fiscal 2024.

These spends have risen consistently in the past few years, from 1.2-1.3% of GSDP on average before fiscal 2018 to 1.6% in fiscal 2023, according to revised estimates.

Going by the taxonomy of state government budgets, revenue expenditure for 'social welfare' refers primarily to disbursements which take place in the form of direct transfers, cash incentives and distribution of personal or household goods. However, these do not include spending on education, agriculture, public health and other key sectors, which are budgeted separately.

The revenue expenditure of states can be broadly divided into committed and non-committed.

Committed expenditure, which states have limited flexibility in managing - including salaries, pension, and interest payments, accounting for 45-47% of revenue expenditure - is estimated to log a compound annual growth rate (CAGR) of ~9% between fiscals 2018 and 2024.

Non-committed expenditure includes outlays on education (10-11% of revenue expenditure), power sector (6-7%), agriculture (6-7%), public health (4-5%), and social welfare schemes (13%).

Says Anuj Sethi, Senior Director, CRISIL Ratings, "Expenditure on social welfare schemes is estimated to clock ~16% CAGR between fiscals 2018 and 2024, much faster than ~11% growth in overall revenue expenditure. The higher growth on social welfare schemes is due to states prioritising financial assistance to certain target demographics in the form of direct transfers, pensions and cash incentives, and, in some instances, to honour election commitments."

Among other components of non-committed revenue expenditure, public health spending is estimated to clock a robust 12-13% CAGR over the six-year period owing to increased allocations amid Covid-19 and continuing focus post-pandemic as well. Growth in allocation towards education and agriculture would be in single digit, at 7-9%.

Thus, social welfare spending is expected to log the fastest growth in the period analysed, taking its share in overall revenue expenditure by state governments up to ~13% this fiscal from ~10% in fiscal 2018.

This increased allocation, however, has coincided with moderate growth in revenue receipts - 10-11% CAGR between fiscals 2018 and 2024 - resulting in continuing revenue deficits for the states.

Says Aditya Jhaver, Director, CRISIL Ratings, "The higher allocation towards welfare schemes has come during a period when capital expenditure (capex) is estimated to log a CAGR of ~11%, keeping it range-bound at ~2.0% of GSDP. Higher allocation for capex or towards education and health has a relatively higher impact on uplifting revenue and productivity for states in the near to medium term".

Click here to send ur comments or to

Disclaimer:The article above is a gist / extract of the original report prepared by the research firm / brokerage firm. This article is not to be considered as an offer to sell or a solicitation to buy any securities. This article is meant for general information only., its employees or owners or the research firms, its employees or owners won't be responsible for any liability that may arise from information, errors or omissions in these articles. or its employees or owners / the research firms or its employees or clients or owners may from time to time hold positions in securities referred in this article. For detailed research reports, please contact the concerned research firm directly.

Other Headlines:

CRISIL Ratings: Higher workplace occupancy to light up cigarette volume 7-9%

CRISIL Ratings: Apparel retailers to grow 7-8% this fiscal via expansion, festival spur

CRISIL Ratings: For tea companies, ~8% revenue degrowth brewing this fiscal

CRISIL Ratings: Revenue of paper makers to crumple 8-10% this fiscal

ICRA expects banking sector to stay resilient, outlook remains Positive

CRISIL MI&A: Red-hot domestic demand to stave off steel price melt this fiscal

CRISIL Ratings: Replacement demand to drive tyre volume up 6-8% this fiscal

CRISIL Ratings: Home textiles makers to weave revenue, profitability rebound this fiscal

Capital outlay on roads, renewables seen rising ~35% in this and next fiscals to Rs ~13 lakh cr, backed by strong execution pace

Softening demand to moderate Indian IT services industry growth to 3-5% in FY2024: ICRA

CRISIL Ratings: Telcos may dial up Ebitda 15-17% to Rs 1.2 lakh crore this fiscal

CRISIL Ratings: Footwear sector revenue to tread ~11% higher this fiscal

CRISIL Ratings: Robust demand to whip up dairy industry revenue 14-16%

Indian hospital industry's operating profit margin will remain healthy at over 22% in FY2024: ICRA

Weak overseas demand to snip 5-6% off jute revenue this fiscal - CRISIL

ICRA expects the telecom services industry to report moderate revenue growth of around 7-9% in FY2024 amid high capex spends

CRISIL - Viscose staple yarn makers set for 10-12% revenue growth this fiscal

Sugar mills seen unscathed despite pricier cane, lower exports - CRISIL

CRISIL Ratings: Specialty chemicals on domestic drive, revenue seen growing 6-7%

CRISIL Ratings: Higher ad spends to lift revenue 13-15% for print media this fiscal

Paytm: Top brokerages, such as ICICI Securities, Axis, Dolat lift Paytm's target price to Rs. 1250

CRISIL Ratings: Securitisation volume surges 60% to first-quarter peak

CRISIL Ratings: FMCG sector to witness 7-9% rise in revenue this fiscal

CRISIL MI&A and ATMA: Tyre industry on a roll, driving towards doubling in size

CRISIL Ratings: Slowing US, EU to chip 6-8% away from handicraft sales this fiscal

CRISIL MI&A: One out of five MSMEs to see stretch in working capital days

Yes Securities Identifies Rural India as Key Driver of Economic Recovery in Latest Report

CRISIL Ratings: Revenue of automotive component makers to grow 10-12% this fiscal

CRISIL: Residential real estate sales to grow 8-10% this fiscal

CRISIL MI&A: Cement prices to dip 1-3% this fiscal despite healthy demand

CRISIL Ratings: Aircraft MRO services revenue could leap 3x in 5 fiscals

Demand pressures to moderate revenue growth of Indian fashion retail entities to 10% in FY2024: ICRA

CRISIL Ratings: Revenue of organised gold jewellers to rise 16-18% this fiscal

CRISIL Ratings: Revenue of top 18 states to grow at 6-8% this fiscal

Automobile Sector - Monthly Quick View - May'23 - Steady YoY and MoM Growth on Low Base; UVs are Clear Winner...

CRISIL Ratings: New guidelines lend much-needed clarity to FLDG usage

MSP for kharif crops - Views of Pushan Sharma, Director - Research, CRISIL Market Intelligence and Analytics

PMI Services logs a record high, Employment scenario, however, remains a concern

Road construction to witness 16-21% jump in FY2024, ahead of General Elections: ICRA

Sustained demand momentum to drive double-digit revenue growth for the Indian hotel industry in FY2024: ICRA

HCL Technologies Ltd - Q4FY23 Result First Cut - A marginal miss on major parameters, though PAT beats expectations

Indian quick-service restaurant industry to witness strong growth in near to medium term with expected ramp-up in store additions: ICRA

HDFC Securities Institutional Research Desk: Report on Infosys - On the back foot

Infosys Ltd. Q4FY23 Result First Cut - A miss on all fronts

Healthy credit growth of NBFCs and HFCs led to highest post-pandemic quarterly securitisation volumes in Q4 FY23, estimated at ~Rs 61,000 crore: ICRA

Impact of Monsoon forecast on Markets - Reliance Securities

HDFC Securities Institutional Research Desk: Report on Kolte Patil Developers - Premiumisation to drive the next leg of growth

Operating margin of domestic base metal entities to remain range-bound at 19-20% in FY2024: ICRA

HDFC Securities Institutional Research Desk: Report on QSR Thematic - QSR: Fishing time?

HDFC Securities Institutional Research Desk: Report on BFSI - The changing contours of debt financing

Website Created & Maintained by : Chennai Scripts
West Mambalam, Chennai - 600 033,
Tamil Nadu, India

disclaimer copyright © 2005 - 2020