Reflecting a tepid recovery in the overall economy amid the easing of lockdown restrictions and a new flare-up of Covid-19 cases, Maharashtra’s monthly collections in taxes and levies fell by 19 per cent to Rs 15,470 crore in August as against Rs 19,334 crore collected a month earlier.
Official statistics further show that amid further reopening of the virus-hit economy, state’s own tax and non-tax revenue plunged from Rs 12,218 crore in July to Rs 10,891 crore last month, which is a near 12 per cent decline. Worsening matters further, August also saw a 50 per cent drop in grant-in-aid receipts from the Centre — from Rs 4,542 crore in July to Rs 2,277 crore in August.
With the sharp surge of reported Covid-19 cases overshadowing efforts to rev up the economy, tax collections in August dropped to Rs 10,710 crore from Rs 11,840 crore a month earlier. The downward slide was even sharper in the non-tax revenue segment. In June and July, officials had collected Rs 310 crore and Rs 378 crore respectively in non-tax revenues. But in August, these dropped to Rs 181 crore.
The downward slide comes at a time when Maharashtra, the worst-hit Indian state by the coronavirus pandemic, is scrambling to raise funds to fight the scourge. The state has so far reported 11,88,015 virus cases and 32,216 deaths. It has also ended a two-month phase when the virus-hit economy had witnessed an upswing, dashing hopes of an early revival of the economy after the easing of the lockdown curbs. State’s earnings in June were Rs 19,344 crore as against Rs 10,584 crore in May and Rs 11,894 in April.
Even as state’s finance managers are banking on collections from major taxes, including GST, excise and stamps and registrations, to go up further in the coming months with more reopenings and economic revival measures set to be announced, officials admitted that the earnings were nowhere near last year’s collections or the budgeted estimates for 2020-21 and admitted the state is bracing for a huge budget hole.
Consider this. By August end in 2019, the state had already reported earnings totalling Rs 1.16 lakh crore, whereas the first five months of 2020 have brought it only Rs 0.77 lakh crore, which is nearly 34 per cent lower than last year. Just before Covid-19 struck, Maharashtra, in its budget plan for 2020-21, had targeted netting Rs 3.47 lakh crore this year, but the first five months of the fiscal have seen barely 22 per cent of this target being realised.
According to a senior official, the upswing in collections reported in June and July was not entirely due to transactions in May and June. “Making use of the Union Finance Ministry three-month moratorium over the payment of GST dues, several companies paid their dues for March-end in June, resulting in a surge in collections,” the official argued. Officials said further the Centre’s delay in releasing GST compensation payments has also set the economy back by Rs 22,534 crore. Struggling to service the economy at the current level, Maharashtra has imposed a 67 per cent cut on development expenditure, freezing almost all new development works, in what is the deepest-ever spend cut in the state government’s history.
The sharp fall in earnings has also forced the state to borrow Rs 40,500 crore so far from the markets to meet the government’s wage bill and committed liabilities. Maharashtra’s economy makes up 14 per cent of India’s Gross Domestic Product.
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