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Informist, Thursday, Feb. 20, 2025

 

By Priyasmita Dutta

 

NEW DELHI – Gujarat Finance Minister Kanu Desai presented the Budget for 2025-26 (Apr-Mar) in the State Assembly on Thursday and anounced a mix of new schemes and enhanced allocations for welfare-centric initiatives, while sticking to fiscal discipline.

 

"With only 6% of the land area and 5% of the total population of the country, Gujarat contributes 8.3% to the country's GDP. We are committed to increasing our contribution to more than 10% by the year 2030 through our sustained efforts," Desai said at the very start of his fourth Budget speech.

 

The Budget pegged the state's fiscal deficit at 1.96% of gross state domestic product for FY26, 70 basis points higher than the revised estimate of 1.89% of GSDP this year. As part of its rolling targets, Gujarat's fiscal deficit is projected at 2% in FY27 and FY28. 

 

The state's market borrowing in FY26 is projected to be INR 660 billion, 17.9% higher than the revised estimate for FY25 at INR 560 billion. As per the state's Budget documents, Gujarat's public debt is projected at 15.28% of GSDP in FY26 and for FY25, it is projected at 14.96%. "The declining trend of debt to GSDP clearly points out that capital receipts are being utilised for generating productive assets," it said. 

 

The total expenditure for FY26 is projected at INR 3.70 trillion, up 11.4% on year. Out of this, revenue expenditure for FY26 is pegged at INR 2.32 trillion, up 7.7% on year. This includes the expenditure on salaries, pensions, interest, grants, and subsidies. The capital expenditure for FY26 is projected at INR 1.34 trillion, sharply higher by 22.9% on year. 

 

Within its expenses, Gujarat government focussed its spending on nine major sectors, starting with creating Viksit Gujarat Fund with a corpus of INR 500 billion for five years. The initial allocation for the fund is INR 50 billion, in FY26. Under this plan, Gujarat will establish six regional growth hubs and develop 12 new high-speed corridors and two greenfield expressways with an initial provision of INR 10.20 billion.

 

Desai also announced 2025 as "Urban Year" and allocated INR 300 billion for various urban developments. He allocated another INR 300 billion for tribal welfare. Following Centre's move, Desai also announced increased support under flagship housing schemes – Pradhan Mantri Awas Yojana (Gramin), Dr. Ambedkar Awas Yojna, Pandit Deen Dayal Awas Yojna and Halpati Awas Yojna. 

 

On the revenue side, Desai, who also holds the portfolio of energy and petrochemicals, projected the revenue receipts for FY26 at INR 2.52 trillion, 8.7% higher than the revised estimate for FY25. The state's own tax revenue is seen growing 7.3% on year to INR 1.58 trillion, while the state's non-tax revenue is seen growing 16.5% on year to INR 237 billion. 

 

In its own tax revenues, goods and services tax and sales tax make up the majority chunk, which are seen growing at a mixed manner. The state's GST collection is expected to grow 7.7% on year to INR 805.20 billion in FY26 while collections from VAT are expected to dip 1.8% to INR 326.26 billion. "...for the coming years, it (state's tax revenue) is assumed to grow consistently from the revised estimates of FY25," its budget documents said.

 

Two key takeaways from Desai's Budget was the announcement to lower stamp duty and lowering of Motor Vehicle Tax. As per the provisions of the Gujarat Stamp Act, 1958, at present a maximum stamp duty of INR 25,000 at the rate of 0.25% is levied on ‘mortgage deed' for loan amounts of up to INR 10 million, which will be reduced to a maximum of INR 5,000, he said. He also lowered Motor Vehicle Tax to a uniform rate of tax of 6% instead of prevailing rates of 8% and 12% levied as per passenger carrying capacity for Maxi category.

 

Transfer from the Union government to Gujarat in FY26 is projected at INR 494.01 billion, while grants are projected at INR 200.11 billion.  End

 

Edited by Deepshikha Bhardwaj

 

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