PATNA
The lockdown in Bihar, which came into force on May 5 this year and was further extended till May 25, has taken its toll on the state’s tax collections, which have started plummeting.
The total revenue for May is expected to be around ₹500 crore as against ₹2,700 crore last month, prompting the finance department to go for higher borrowings within specified limit from next month onwards to meet various expenditures.
Sources said tax collections for May till Thursday was over ₹400 crore and expected to reach the ₹500 crore by the end of month. “There is a huge shortfall in tax collections from internal sources this month as against last month’s figures. This is owing to lockdown and restrictions in commercial activity,” said a finance department official, seeking anonymity.
The sharp decline is a major cause of worry for finance officials, who say the state, having already battled contraction in economy last fiscal, would not have enough funds for development works and committed expenditure if Covid restrictions continue over the next few months.
“We have to increase our borrowings from next month. We are only hoping central devolutions are higher this fiscal or else the fiscal position will be tight and adversely affect implementation of schemes,” said another official.
{{/usCountry}}“We have to increase our borrowings from next month. We are only hoping central devolutions are higher this fiscal or else the fiscal position will be tight and adversely affect implementation of schemes,” said another official.
{{/usCountry}}The state government has a borrowing limit of ₹36,000 crore for the current fiscal (2021-22). Sources said the government will be borrowing ₹2,000 crore next week in the first tranche and then ₹4,000 crore from next month onwards from the market to ensure funds for various expenditures and shortfall in revenue collections. The borrowings would be assessed once the tax collections start improving, officials said.
The state’s public debt for the fiscal 2020-21 stands at ₹1.77 lakh crore. The state government total budget outlay is ₹2.18 lakh crore for 2021-22, with a target of ₹40,000 crore as revenue from state’s own internal sources like transport, commercial taxes, registration and mining.
Last fiscal, Bihar managed to get ₹60,000 crore as central devolutions by way of its share in central taxes, belying apprehensions that the devolutions would be much less due to the economic contraction on account of the Covid-19 pandemic. In 2019-20, the state had received ₹63,000 crore as central devolutions from share of taxes.
Sources said the government’s tax collections from own sources in the last fiscal was close to ₹35,000 crore, a shortfall of 10 -12% against the target of ₹39,900 crore.
“Our tax collections were good despite lockdown and restrictions for several months last year. The higher central devolutions than expectedsaved the day for us in terms of keeping our fiscal position good so far,” said a finance official.
He said the picture of fund availability from central sources would be clearer for the current fiscal when the 43rd GST council meeting, to be chaired by union finance minister Nirmala Sitharaman, takes place on May 28.
Sources the state government has kept a budgetary provision of ₹3,500 crore as compensation cess for the current fiscal.
Principal secretary (finance) S Siddharth refused to comment on low tax collections owing to the lockdown in May or the government’s plans to start borrowing from next month.
Headline: Tax May-hem
Intro: Lockdown in Bihar came into force on May 5 this year and was further extended till May 25
Total revenue
April: ₹2,700 crore
May: ₹500 crore (expected)
Borrowing
Limit for current fiscal: ₹36,000 crore
Planned next week: ₹2,000 crore
Next month onwards: ₹4,000 crore
State’s internal sources of tax
Transport, commercial taxes, registration, mining