Public Expenditure in Punjab, Gujarat and Rajasthan

Abstract

This paper examines the size, composition and quality of public expenditure in three large Indian states Punjab, Gujarat and Rajasthan using audited figures up to FY 2021-22, revised estimates for FY 2022-23 and the latest available FY 2023-24 Budget Estimates (BE). It situates each state’s fiscal choices in the broader post-GST, post-pandemic macro-fiscal context, including the tapering of grants, the central push for state capital spending and pressures from committed expenditure and subsidies. The analysis finds: (i) Gujarat sustains a modest revenue surplus and mounts an aggressive capital outlay push in 2023-24; (ii) Rajasthan improves receipts and steps up capital outlay, but faces medium-term risks from the re-adoption of the Old Pension Scheme (OPS); and (iii) Punjab contends with a persistent revenue deficit and a very high ratio of committed expenditure to revenue receipts, with electricity subsidies weighing heavily on fiscal space. Cross-state contrasts underscore the trade-offs among subsidy design, pension policy and growth-enhancing capital spending. Policy recommendations focus on protecting capex, rationalising non-merit subsidies, strengthening public financial management (PFM) and improving discom and pension sustainability. Key figures cited are drawn from official budget analyses and authoritative fiscal surveys.