Gujarat: State economy set to grow by 0.6 per cent in 2020-21

The Gujarat economy, which was hit by the Covid-19 pandemic, is expected to grow by 0.6 per cent for the year 2020-21.

According to the macroeconomic framework statements presented as part of the state Budget, Gujarat’s Gross State Domestic Product (GsDP) at current prices will grow only at 0.6 per cent which is a far cry from the 9.8 per cent registered in the previous year 2019-20. “

On account of nationwide lockdown due to Covid-19 pandemic and related restrictions, the growth rate of GSDP has witnessed considerable slide in the revised estimates for the financial year 2020-21,” the statement said. In the last decade, the highest growth rate clocked was 17.7 per cent in 2012-13.

Rise in public debt

The pandemic has also had an adverse impact on Gujarat’s public debt which is expected to cross Rs 3 lakh crore by the end of the current fiscal. As on March 31, 2021, the gross public debt of Gujarat is estimated to be Rs 3,00,959 crore which is 18.14 per cent of the GSDP. In March 2020, the public debt stood at Rs 2,67,095 crore which was 16.19 per cent of GSDP.

“Due to the impact of Covid-19 pandemic and resultant nationwide lockdown, rose receipts plunged, while expenditure increased. This situation created more burden on public debt,” stated the government in the statements under the Gujarat Fiscal Responsibility Act, 2005. Almost 78 per cent of the composition of debt for 2020-21 is made up of market loans. Most of the borrowed loans have tenures ranging from 2-10 years. This public debt of the state is set to rise to Rs 3,27,134 crore by the end of 2021-22 and cross Rs 4.1 lakh crore by 2023-24.

Dip in central grants

The money that Gujarat received as Grant-in-aid and contribution from central government also saw a dip of 32 per cent when compared to 2019-20 when the quantum stood at Rs 25,500 crore. In 2020-21, the state will receive only Rs 17,370 crore and as per the budget estimates for 2021-22, this support from Centre will further fall to Rs 16313 crore. “This is largely because the Centre’s own revenues have gone down,” an official from the state’s finance department said.

GST revenues plunge

According to the revised estimates of 2020-21, the revenues of Gujarat plunged by 21,952 crore. This included revenues from GST. While presenting the budget in state legislature, Finance Minister Nitin Patel said state income from GST in the first quarter of the current financial year was 40 per cent less compared to the corresponding quarter of the previous year.

“In the second quarter, the income was 15 per cent short compared to previous year. However income in third quarter recorded a five per cent increase,” Patel said adding that state’s income from GST was Rs ,3413 crore in January 2021 and in February it rose to Rs 3,514 crore.

Gujarat will be getting Rs 9,200 crore as loan for shortfall in GST collections.

“The centre made an arrangement of a loan for all the state governments this year as revenues dipped due to Covid. Apart from GST compensation, the state is expected to receive Rs 9,200 crore. The state has received an estimated Rs 8,800 crore in 17 instalments. We expect the remaining money to come to us by the end of this fiscal,” said JP Gupta, chief commissioner of SGST while addressing media persons after the budget.

The fiscal deficit for the current fiscal is expected to be 3.1 per cent which will be well within the prescribed target of 5 per cent, officials added.