Maha’s tax revenue hit by 13% in FY 20-21 due to Covid-19: CAG report

According to the CAG report tabled in the state legislature on Thursday, revenue receipts in FY 20-21 decreased to ₹2,69,468 crore from ₹2,83,190 crore

Mumbai: Comptroller and Auditor General (CAG) has stated that the Covid-19 pandemic, subsequent lockdowns and high spending to mitigate the virus had an unprecedented impact on the state’s finances. Maharashtra’s tax revenue in FY 2020-21 dropped steeply by 13.07%, capital outlay declined by 18.48% and market borrowings increased drastically by 51.59%.

File Photo (REUTERS)

According to the CAG report tabled in the state legislature on Thursday, revenue receipts in FY 20-21 decreased to ₹2,69,468 crore from ₹2,83,190 crore due to a drastic drop in tax revenue from sources like GST, sales tax, stamp duty and registration, vehicle tax, among others.

The revenue expenditure, however, increased to ₹3,10,610 crore from ₹3,00,305 crore in FY 2019-20. The drop in revenue was attributed to the economic crisis driven by the pandemic and a natural rise in expenditure, causing in the multifold rise in borrowings. Consequently, the total debt rose to ₹5,36,199 crore in FY 20-21 from ₹4,79,899 crore in the year before that.

The pandemic also affected the growth of the Gross State Domestic Product (GSDP) which was (-)5.57% as it dropped to ₹26,61,629 crore in FY 2020-2021 from ₹28,18,555 crore in 2019-2020. The CAG also rapped the state government for poor spending of budgetary allocation. “The budgetary exercise carried out by the government needs to be more realistic as 20% of the total provision remained unutilised. The expenditure incurred during FY 2019-20 was 8% less than the original budget. The supplementary budget constituted 16% of the original budget,” the report stated.

“Supplementary provision of ₹13,226 crore obtained during the year proved unnecessary as the actual expenditure on the grants ( ₹1,47,153 crore) did not reach the levels of the original provisions of ₹2,03,836 crore,” the report stated.

It has also recommended that the state should assess and formulate a realistic budget based on reliable assumptions considering the needs and capacity of the departments and their capacity to utilise the allocated resources.

According to the officials from the finance department, the state finances went for a toss due to a drastic drop in the revenue receipts. “Not only in Maharashtra, but the crisis was faced by all states and even the central government in FY 2019-20 because of the pandemic and lockdowns. The situation improved in FY 2021-22 and the economy is now on a recovery path,” the official said.

The CAG has, however, hailed the state government for the number of attempts it took to contain the fiscal deficit below 3% keeping it at 2.69% in FY 2020-21. The revenue deficit increased to ₹41,142 crore in FY 2020-21 from ₹17,116 crore in 2019-20.