Daijiworld Media Network - Bengaluru (SP)
Bengaluru, Aug 29: Because of coronavirus pandemic and floods, the state's finances have been hit very badly. The revenue collection has hit the nadir this year and as per an estimate, managing any recovery looks bleak. The state government is left in the lurch with the unusual response of the central government on state share of the GST compensation.
As tax collection went down 40 percent for the first four months, the government has lost income of about Rs 14,702 crore. Now the central government has expressed helplessness on providing GST compensation of Rs 13,764 crore. These have delivered a deadly blow to the state and as such, achieving development will be a far cry for the current year.
The revenue target for the four months was Rs 37,332 crore but sources in the finance department say that actual collection is Rs 27,630 crore. The state is scrambling even to pay bills of contractors. The government had planned the revenue of the state at Rs 1,79,920 crore and loan of Rs 52,9198 crore and thought of achieving a robust growth. Even though GST collection had fallen deeply, the state was hoping to recoup the shortage out of compensation from the central government. The finance department expected to receive Rs 28,000 crore as central GST compensation. The central government, which should have disbursed Rs 13,764 crore to the state, has advised states to raise loans if needed.
Because of the economic slump, revenue collection last year was far from satisfactory. Floods had also inflicted huge losses. This year, before the state could recover itself, corona and floods hit the state hard. As such, revenue collection has suffered. During the first four months, the shortfall in tax collection is about Rs 14,700 crore. Main departments which ring in revenue to the state government have not been witnessing any buoyancy.
Even though industries and commerce have resumed business now, they are yet to show any notable recovery. This has influenced the tax collection. At least three more months would be required to show some improvement. The state can hope to fare well only if commercial activities are in full swing, and the centre disburses compensation it is expected to pay. Now, Yediyurappa’s dream budget will have to undergo changes by cutting grants to all the departments. Even though the option of raising a loan has been given by the centre, a final decision has not been taken by the state. The state is yet to disburse about Rs 20,000 crore to contractors in PWD, water resources, PWD, rural development, urban development and infrastructure departments.
Even there has not been a spurt in sale of diesel and petrol. As against the expected annual collection of Rs 17,000 crore, the collection from fuel so far is only Rs 3,957 crore during the four months. Unless trains begin to move, sale of fuel cannot pick up, officials say.