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Thursday, June 04, 2020

Maharashtra suffers hefty losses; fiscal managers say it will mount further

The loss in potential revenue could be as high as Rs 18,000 crore for the state's Goods and Services Tax, which is the state's highest revenue grosser.

Written by Sandeep A Ashar | Mumbai | Updated: April 1, 2020 11:27:23 pm
maharashtra coronavirus lockdown, maharashtra revenue loss, coronavirus impact on economy, coronvirus india news updates Security tightened as Worli Koliwada and Adarsh Nagar, Prabhadevi remain sealed. (Express photo by Nirmal Harindran)

The Maharashtra government is set to suffer a hefty loss of income due to unprecedented shutdowns prompted by the fear of the spread of COVID-19. According to government estimates, the state’s own tax collections for 2019-20 is now expected to fall short of Rs 27,000 crore of its revised target set last month.

On March 6, state Finance Minister Ajit Pawar, while spelling out the spend plan for 2020-21, had revised the income targets for the current fiscal to Rs 1,99,534 crore, down 5.35 per cent over the originally budgeted target of Rs 2,10,824 crore.

Restrictions to contain the spread of COVID-19 were first put in place on March 14 with the state announcing a shut down of recreational facilities, including gymnasiums, theatres and swimming pools. But the measures were intensified further, until Prime Minister Narendra Modi announced a 21-day nationwide lockdown on March 24.

Tuesday was the last day of the financial year. Statistics compiled by the government after taking the tax collections on the final day into account reveal that the state’s own tax revenue will fall Rs 27,000 crore short of the revised target itself, making it difficult for the government to even allocate funds for committed expenditure including salaries, allowances and servicing of debt.

The loss in potential revenue could be as high as Rs 18,000 crore for the state’s Goods and Services Tax, which is the state’s highest revenue grosser. While the state had set a revised income target of Rs 86469.89 crore, the lockdowns and the halt in economic activities have meant that the actual collections have come down to Rs 68469 crore.

With no property transaction undertaking after mid-March, the stamp and registration fees collections, too, have suffered a loss of Rs 1,600 crore in potential revenue, from Rs 29,500 crore as per revised targets to Rs 27,900 crore or thereabouts.

Read | Lockdown impact: Repo rate cut to 3-month moratorium on EMIs, what RBI announced today

Collections from excise duty and vehicle tax have also fallen by Rs 2,000 crore and Rs 500 crore approximately, a senior official said.

The state is bracing for a sharp economic slowdown in the first quarter of 2020-21 as factories remain close and the consumer demand has hit rock bottom. “A majority of the labour force has gone back to their villages. Many of them won’t return till September, especially considering the ordeal they have faced to reach home. Unless most of the labour force returns, it would be difficult for normalcy to return,” the official added.

In April itself, the state is expected to incur heavy losses. “Last April, the government had garnered Rs 21,000 crore in all, this time we do not expect to the go beyond Rs 1,500 to Rs 2,000 crore given that the lockdowns will be in place at least till mid-April,” an official said.

As a contingency measures, Pawar on Tuesday announced March salaries and allowances for government staff, and elected representatives will be paid in two installments.

Here’s a quick Coronavirus guide from Express Explained to keep you updated: What can cause a COVID-19 patient to relapse after recovery? | COVID-19 lockdown has cleaned up the air, but this may not be good news. Here’s why | Can alternative medicine work against the coronavirus? | A five-minute test for COVID-19 has been readied, India may get it too | How India is building up defence during lockdown | Why only a fraction of those with coronavirus suffer acutely | How do healthcare workers protect themselves from getting infected? | What does it take to set up isolation wards?

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