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Expenditure Pattern and Committed Expenditure Challenge
Classification of Expenditure
State expenditure is classified on two axes:
Axis 1: Revenue vs. Capital
- Revenue Expenditure: Day-to-day running costs — salaries, pensions, interest, O&M, subsidies. Does not create assets.
- Capital Expenditure: Asset creation — roads, irrigation, buildings, equipment. Creates durable infrastructure.
Axis 2: Developmental vs. Non-Developmental
- Developmental Expenditure: Expenditure on social and economic services (education, health, agriculture, irrigation, industry).
- Non-Developmental Expenditure: General administration, interest payments, defence, police.
Revenue Expenditure Breakdown (2023-24)
| Category | Share of Revenue Expenditure | Key Components |
|---|---|---|
| Social Services | 42.06% | Education, health, water supply, housing, welfare |
| General Services | 32.07% | Administration, police, judicial, debt servicing |
| Economic Services | 25.87% | Agriculture, irrigation, industry, energy, transport |
Source: Rajasthan Economic Review 2025-26, Chapter 1
Total expenditure on schemes in 2023-24 was ₹1,56,867 crore, up 10.27% over 2022-23 (₹1,42,248 crore).
The Committed Expenditure Problem
Committed Expenditure refers to legally or contractually obligatory revenue expenditure that cannot be reduced in the short run. In Rajasthan, three heads together consume approximately 60% of revenue expenditure:
Salaries and Wages
- Rajasthan's state government employs approximately 6-7 lakh regular employees across departments
- Salary bill is the single largest revenue expenditure head
- 7th Pay Commission implementation added significantly to the salary burden
Pensions
- Rajasthan operates the Old Pension Scheme (OPS) — one of the first states to revert from NPS in 2022
- The current BJP government has reconsidered this position
- OPS creates an unfunded, open-ended pension liability that grows year-on-year — Rajasthan's single most significant medium-term fiscal risk
Interest Payments
- Total fiscal liabilities: ₹5,71,639 crore (37.57% of GSDP in 2023-24)
- At an average borrowing rate of 7-7.5%, annual interest burden is approximately ₹40,000-43,000 crore
- Even at historical borrowing rates, interest consumes a large and rising share of revenue receipts
The compressed fiscal space after committed expenditure is the structural cause of Rajasthan's persistent revenue deficit and the difficulty in scaling up capital expenditure.
Capital Outlay: The Investment Push
Despite committed expenditure pressure, Capital Outlay in 2023-24 was ₹26,646 crore — a significant 34.6% increase over the previous year. This reflects the current government's priority on infrastructure creation. The share of capital outlay in total expenditure, however, remains below the 15-20% range considered optimal for infrastructure-led growth.
Developmental expenditure in 2023-24 stood at ₹1,91,190 crore = 71% of total expenditure, indicating a developmental focus. The remaining 29% covers general and administrative services including interest payments.