Maha budget: No tax hikes, but liquor set to cost more
The budget, with an estimated revenue expenditure of Rs2.48 lakh crore, will not burn a hole in your pocket, at least for the next three monthsmumbai Updated: Mar 18, 2017 22:55 IST
With a backdrop of demonetisation and a change in the tax regime in July, the state finance minister Sudhir Mungantiwar on Saturday presented a cautious budget for 2017-18, which shied away from big bang announcements. The budget did not commit to a farm loan waiver, but said the state had requested the Centre for assistance and would give budgetary support for any future Central government scheme to “reduce farmers’ old debts’’.
The budget, with an estimated revenue expenditure of Rs2.48 lakh crore, tabled in both the houses of the state legislature amid din by the Opposition seeking loan waiver for farmers, will not burn a hole in your pocket, at least for the next three months. The state government did not hike any taxes in lieu of the Goods and Services Tax (GST) being rolled out in the country from July 1. The only exception was to hike value added tax (VAT) on foreign liquor, Indian-made foreign liquor and country liquor from 23.08% to 25.93% and increase tax on weekly lotteries from Rs70,000 to Rs1 lakh. The former will mean that a bottle of whiskey costing Rs1,000 will be dearer by Rs30 — the overall impact in a restaurant may be higher.
”Our focus in the budget was on agriculture, followed by infrastructure, along with an attempt to improve employment through skill development. There has been no impact of demonetisation, even though we have not met some of our revenue targets such as in stamp duty and registrations. Our sales tax revenue target has been met and we have estimated an increase for next year. We have moved from a slow growth rate of 5.4% during the Congress-NCP regime to 9.4% now,’’ said Mungantiwar.
On the other hand, the finance minister waived of VAT of 13.5% on card swipe machines to promote cashless transactions, extended VAT exemptions on essential commodities such as rice, wheat and pulses until the GST roll-out.
While clarity on taxes will come only after July 1, it is evident the state will now look at ways to hike its non-tax revenue by hiking state-linked levies, fees and lease rents on government plots. The budget made a beginning with Mungantiwar announcing a review of existing court fees and penalties under various existing legislations.
Despite the state’s insistence that demonetisation had little impact on the state exchequer, the budget figures (revised estimates for 2016-17) revealed otherwise, with the government falling short of its revenue earnings target by a good Rs11,283 crore. The income from real estate, such as stamp duty and registrations as Mungantiwar pointed out, sale of FSI besides excise earnings took a hit.
Given the cash crunch and an estimated revenue deficit of Rs4,511 crore for 2017-18, Mungantiwar had little elbow room to make new announcements or schemes. So what we have is run-of-the-mill allocations largely for ongoing schemes – smart cities, Employment Guarantee Scheme, Jalyukt Shivar, Atal Mission for Rejuvenation and Urban Transformation – with maximum focus on irrigation, transport services (roads, infrastructure) and agriculture.
The total allocation of schemes for 2017-18 works out to Rs77,184 crore, with maximum allocation made for transport services, including roads, civil aviation, ports (Rs 11,039 crore) followed by irrigation (Rs8,701 crore) and then agriculture (Rs 7035 crore). Mungantiwar in his speech claimed this was an increase of 10.25 per cent over last year.
Some new ideas and schemes were announced such as setting up of a special infrastructure company, Mahainfra, to finance the state’s Rs1 lakh crore projects and Rs200 crore for setting up of farmer groups or farmer producer companies but critics said good ideas were too few.
“The finance minister failed to give any kind of an overall financial statement or roadmap for the state before the implementation of GST. It is clear that the state’s incomes have taken a hit due to demonetisation and there seems to be a problem with liquidity. There is also a big question mark whether this year the state can meet its revenue targets given that recovery in certain sectors like real estate seems unlikely,’’ said NCP leader and former finance minister Jayant Patil.
He said, “It is also evident that the state is in no position to shoulder loan waiver for farmers, so they will be cheated.’’