States’ finances: Optimistic revenue forecast could hit capex or deficit

Also, the non-tax revenues which states generate on their own are expected to rise at a much faster 18.7 per cent in 2018-19 compared with an increase of 9.2 per cent in 2017-18.

By: ENS Economic Bureau | New Delhi | Published: April 16, 2018 2:07:19 am
business news, state revenues, state capital expenditure, SGST, state GST, GST revenues, indian express For a group of 13 states, aggregate revenues are forecast to grow at 14.4 per cent against 21.3 per cent in 2017-18.

With a clutch of states expected to clock in a slower pace of aggregate revenues in 2018-19, the casualty could be either their capital expenditure (capex) or their deficits.

For a group of 13 states, aggregate revenues are forecast to grow at 14.4 per cent against 21.3 per cent in 2017-18. The muted revenue growth, a study by Icra reveals, is thanks to a smaller increase in grants from the Centre and a slower rise in the tax revenues that states collect themselves. However, taxes devolving from the Centre are tipped to see a bigger increase—up 14.1 per cent from 11 per cent.

Also, the non-tax revenues which states generate on their own are expected to rise at a much faster 18.7 per cent in 2018-19 compared with an increase of 9.2 per cent in 2017-18.

In the absence of clarity on the data, economists at ICRA point out the SGST (state GST) revenues projected by some states are optimistic. Uttar Pradesh, for example, has budgeted for a 29 per cent increase in own tax revenues on a 10 per cent rise in 2017-18.

While it is reasonable for states to project SGST revenue growth up to 14 per cent since they will get compensation from the Centre for any shortfall from that level, many states have estimated much higher growth rates. FE

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