After missing revenue targets for the financial year 2016-17, largely owing to the centre’s demonetisation shock, the state government has set a realistic target for revenue receipts from stamp duty, excise and housing sector in the current financial year. Learning from trends over the past three years, the Devendra Fadnavis-led government has reduced its 2017-18 budget estimate for revenues.
The major part of the state revenue comes from sales tax, stamp duty and registration, state excise, vehicle tax and earnings from floor space index (FSI) and premiums in the housing sector. In 2016-17, state excise and stamp duty collections fell short by Rs1,744 crore and Rs 3,548 crore.
The government had expected Rs5,000 crore from sale of additional FSI and rise in the premium, and Rs1,067 crore from SRA schemes. In fact, the two sectors could collect only Rs1,700 crore and Rs74 crore, leading to a deficit of Rs4,693 crore. The housing sector has belied state’s revenue expectations for the past three years.
The state government has, however, taken a leaf out of the poor collection from these sectors in the past three years.
The stamp duty and registration department has predicted that the demonetisation will continue to haunt the real estate for next two quarters.
As a result, estimated revenue from stamp duty is pegged at Rs21,000 crore this fiscal year, much lesser than Rs23,547 crore in 2016-17. Similarly, estimated collection from state excise duty has dropped to Rs14,340 crore, which was Rs15,343 crore the previous fiscal year. The expected collection from the sale of FSI and premiums has dropped by Rs1,700 crore compared to last year’s target. Surprisingly, the budget estimates for revenues under SRA schemes have been increased to Rs1,076 crore.
The Supreme Court order to close liquor shops and bars is going to further hit the excise duty collection. More than 60% of the establishments are likely to shut.
“The department this time has tried to be realistic, by keeping the targets low. Every year, we expect the year-on-year rise by 10 to 15% from these key departments, but this time the expected rise has been kept as low as 5 to 12%. In some cases, the expected growth is even lesser than what it was expected in the 2016-17 budget,” said an official from the finance department. The officer said the department even had suggested to keep the plan expenditure in limit and below the current year’s figures of Rs56,997 crore to keep the revenue deficit under check.
“But the political leadership insisted to raise it by Rs5,000 crore so that the growth rate of 9.4% is achieved,” he added.
As a result of the lower targets next fiscal, the overall revenue receipts in 2017-18 has also reduced sharply. While the estimated rise in receipts in 2016-17 was Rs35,000 crore, it has slumped to Rs23,000 crore in 2017-18.
Finance minister Sudhir Mungantiwar said, “It is true that we could not achieve our targets this year, but I am sure we will be able to achieve our goals this year. We are hopeful about the collection from the excise and stamp duty too.”