Maharashtra’s downward slide in revenue projection could force the Bharatiya Janata Party government to broaden the tax net and introduce new tax proposals.
The state’s budget for 2017-18 will be tabled on Saturday. While the Devendra Fadnavis government had opted to go easy on taxes in the first two years in office, the state’s fiscal managers warned of a push by the administration to ratchet up tax and non-tax revenues in the coming fiscal.
Top government sources conceded that the country’s most industrialised state will miss fiscal targets in 2016-17 with the Centre’s demonetisation drive hitting revenue collections and revenue expenditure continuing to rise.
According to Maharashtra Accountant General’s latest data, the government, which had targeted a revenue collection of Rs 2.71 lakh crore in 2016-17, had amassed Rs 2.05 lakh crore till January 31. Senior state officials admitted that garnering the remaining Rs 65,641 crore in the final two months of the year appeared challenging.
A sharp dip in sales of goods and taxes in the post demonetisation period saw sales tax collections dry up. Sales tax is the highest revenue earner for the government. For 2016-17, the government had targeted Rs 81,438 crore collection through sales tax, but the actual collection until January 31 was just Rs 69,253 crore, a 15 per cent deficit. Revenues from taxes on goods and services also nosedived. Only Rs 324 crore against a target of Rs 1,276 crore was collected till January 31.
At the start of the year, the government had targeted to raise another Rs 3,200 crore through land revenue, but only Rs 823 crore had been realised so far. The slump in the property market saw a dip in the stamps and registration revenues too. As against a target of Rs 23,548 crore, only Rs 16,348 crore had been collected till January 31. The state’s excise and electricity duty collections were also running 38 per cent and 50 per cent behind targeted goals till January 31.
The government had expected to net Rs 1.44 crore in tax revenue from its own sources. But the Accountant General’s data shows that only Rs 1.10 crore had been collected till January 31.
The non-tax revenue collections were faring worse. While the target was to collect Rs 19,927 crore, only Rs 9,034 crore had been collected till January 31.
Incidentally while the state’s share from central Customs duty was 28 per cent behind target, the Union excise duty collection was the only tax revenue to have met its target. While the government had estimated to collect Rs 3,946 crore Union excise duty at the start of the year, data showed that it had already collected Rs 4,075 crore till January 31. “There was a rush to pay up arrears using the scrapped high value currencies between November 10 and December 31. This may have boosted central excise collections,” an official said. But the overall sharp dip in revenue appeared to force the state to draw more from the public account.
Sources said that the government is banking on positive growth in the agriculture sector for 2016-17. The rural economy, which was in a spectre of consecutive drought spells, bounced back riding on a good monsoon in 2016-17. The state’s Economic Survey Report will be released on Friday.