States want redressal for revenue loss after note ban

Sensing shortfall in revenue following demonetisation, state governments have urged the Centre to compensate the losses and increase funding to run welfare schemes meant for the weaker sections without any hiccups.

Updated on: Nov 24, 2016, 23:58:51 IST

Hindustan Times | By Chetan Chauhan, New Delhi

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Sensing shortfall in revenue following demonetisation, state governments have urged the Centre to compensate the losses and increase funding to run welfare schemes meant for the weaker sections without any hiccups.

A bank employee counts Indian rupee notes at a bank in Mumbai. (AFP File Photo)

Most states have estimated a drop of 30-40% loss in revenue from major sources—excise, property registration and value added tax (sales tax) because of demonetisation. For most of them, excise and VAT are the biggest grossers, contributing up to 80% of the total revenue.

“There is some concern among states that demonetisation will lead to revenue loss and they may face finance crunch in important welfare schemes,” said a senior finance ministry official after a meeting of Finance Minister Arun Jaitley with state finance ministers on the rolling out of Goods and Service Tax (GST) from the next financial year.

The official said states wanted the Centre to compensate by providing additional money in the supplementary budget to be presented in the winter session of Parliament.

The Telangana government on Wednesday wrote to the Centre seeking special financial assistance and release of Central Sales Tax arrears to meet the expected revenue shortfall of `3,000 crore.

The Andhra Pradesh government has sought similar assistance and supply of “point of sale” machines at 80% subsidy for its liquor shops and bars. The state has recorded about 50% fall in excise revenue since Prime Minister Narendra Modi announced the scrapping of Rs 500, Rs 1,000 notes on November 8.

The Tamil Nadu government is assessing the quantum of revenue loss and will be seeking re-imbursement. “Demonetisation has impacted all, from the government to poor people,” said AIADMK spokesperson and former finance minister C Ponnaiyan.

States like Uttar Pradesh, Bihar and West Bengal are also assessing the situation, after which they may seek compensation, officials said.

BJP governments in Haryana, Madhya Pradesh and Jharkhand have reported fall in revenues by 20-30% but have not yet decided to seek compensation.

While the state governments have money to pay staff salaries next month, officials say the revenue crunch may result in “slowdown” in the implementation of welfare schemes such as pensions, MGNREGA and funding infrastructure projects.

ABOUT THE AUTHOR
Chetan Chauhan
Chetan Chauhan is the National Affairs Editor looking into all aspects of news and features from across India. A Chevening scholar with over three decades of experience in reporting and news management, Chetan has extensively covered all important aspects of the social sector, political economy, environment and climate change nationally and internationally. He did a journalism course at the Reuters Institute of Journalism in Oxford and Digital Media training at Nanyang Technological University in Singapore. He started as a reporter with The Statesman in 1996 and joined the Hindustan Times in 2000 in the metro bureau covering environment, crime and Delhi politics. He covered hot local news, from the Jessica Lal murder case to the rebellion of Delhi Congress MLAs against then Chief Minister Sheila Dikshit, to the replacement of toxic vehicle fuel with cleaner compressed natural gas (CNG) in the national capital. Some of his stories on air pollution became part of the Supreme Court’s landmark MC Mehta versus Government of India case in the National Capital Region (NCR), forcing the government to take corrective measures. As part of the national political bureau since 2004, he covered important central sectors such as environment, education, social justice, labour, rural development, water resources, renewable energy, agriculture, broadcasting and the Planning Commission for more than a decade producing several exclusive and investigative breaking stories. His specialisation is the environment, having covered at least a dozen United Nations global conferences on climate change, biodiversity and wildlife including climate summits in Paris, Copenhagen and Bali. He also covered India’s two five-year plans ---11th and 12th and reported on drafting and execution of right based laws such as Right to Education, Right to Information and rural job guarantee law, MG-NREGA, now being introduced in new format as VG-RAM-G Act. He has in-depth knowledge of social sector issues. He was one of the first to report on tigers vanishing from Sariska and Panna wildlife reserves in 2004 and 2008, respectively, leading to the setting up of the National Tiger Conservation Authority (NTCA) and the introduction of stringent penal provisions for poaching. He has written extensively on the rising human-animal conflict in India and the degradation of India’s biodiversity hotspots because of mining and other activities. Since 2004, Chetan has covered Parliament comprehensively and participated in training on the nuanced coverage of Parliament proceedings. He has travelled extensively across India to cover national and provincial elections since 1998, especially in the Hindi heartland states, considered India’s road to power. He writes a regular column for Hindustan Times, Ecostani, on important national politics, economy, Himalayan ecology and environmental issues. His other responsibilities include providing inputs for edits and edit page articles for the publication, apart from managing news flow from across India.Read More

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