No note ban impact, tax collection in FY17 to exceed estimates: Arun Jaitley

Representatives of states said their revenues have been hit due to demonetisation.

By: ENS Economic Bureau | New Delhi | Published: January 5, 2017 12:52 am
note ban, demonetisation, demonetisation effects, note ban impact, tax collection, financial year, arun jaitley, indian express news, india news, business news, economy Arun Jailtey

In a pre-budget meeting with finance minister Arun Jaitley on Wednesday, some states including Andhra Pradesh and Jharkhand asked the Centre for relaxation in Fiscal Responsibility and Budget Management (FRBM) Act enabling them to borrow more from the market.

Representatives of states said their revenues have been hit due to demonetisation.

Most states also expressed the need for giving fiscal stimulus, allocation of high outlay for National Rural Employment Generation Programmes and expansion of banking services in remote areas.

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West Bengal finance minister Amit Mitra on Wednesday staged a walkout from a pre-budget meeting, arguing that demonetisation has ushered in financial and political emergency in the country.

“I would like to say today with a very heavy heart I’ve walked out of the meeting after making the presentation in protest in the appropriate manner that democracy deserves. I spoke as per the idea that we will give details to the finance minister, I touched up on various areas, but I primarily spoke on demonetisation and what it is doing to the economy…,” Mitra said.

“You make a budget on the reality on the ground. There is a financial emergency that is not being talked about,” he added.

States asked relaxing FRBM limit for raising their borrowing capacity by raising it by 1 per cent or at least by 0.5 per cent.

States suggested need for setting up of inter-states green corridor for sharing of green energy, certainty about devolution of funds to states well in advance.

Delhi deputy chief minister Manish Sisodia said demonetisation resulted in Delhi government is running on losses, with revenue growth at (-)24 per cent. The state’s revenues are expected to fall further in January and February, he said.

However, Jaitley said that demonetisation has not impacted revenue collection of the states. “Finance minister after finance minister (of various states) today gave their own estimations of the December revenues, which relate to what was collected in November and a number of them (Punjab, Haryana, Assam) gave details of how there has been a revenue increase in those states,” he said.

“We have asked the states to furnish the data and also give us the comparative data of last two-three years so that we can study month-to-month pattern,” he added.

He said the Centre is expected to surpass its tax estimates of Rs 16.3 lakh crore for the current fiscal year. “We will end this year with higher revenues both direct and indirect taxes, higher than budgeted. Not only are we going to reach the budget estimates, we will exceed the budget estimates both in direct tax and indirect tax this year,” he said.

Jaitley made light of West Bengal finance minister Amit Mitra’s comments that his states had seen a 13 per cent drop in tax revenues post demonetisation, saying “states which are governed well, have earned well”.

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