Slump hits state coffers
The state government is bracing itself to lose about Rs 2,300 crore in tax revenues due to the economic downturn. The stagnant real estate market is pinching the state the hardest, reports Zeeshan Shaikh.india Updated: Feb 13, 2009 01:34 IST
If you think it is only the common man who is feeling the pinch of global economic slowdown, think again. The state government is bracing itself to lose about Rs 2,300 crore in tax revenues due to the economic downturn. The stagnant real estate market is pinching the state the hardest.
The government had set a target of Rs 51,893 crore for tax revenue for 2008-09. However with the economic slowdown, the target is likely to fall short by Rs 2,300 crore. The tax revenue targets for the state till January was Rs 41,404 crore. However, the government has been able to collect only Rs 39,749 crore.
“The global economic slowdown has affected our tax collections,” said Finance Minister Dilip Walse Patil.
The slowdown has affected the real estate market which is also evident from state’s collection of fees from registration of house purchases.
The state was expecting nearly Rs 9,600 crore from stamp and registration fees which contribute nearly 9 per cent to the state’s exchequer. However with the real estate market tottering, officials feel the figure will fall short by Rs 1,100 crore. The state will get only Rs 8,500 crore.
Of the total expected revenue of Rs 79,911 crore, nearly 41 per cent (Rs 32,116 cr) of the money goes for salaries to state government employees leaving only 59 per cent for development.
However with the implementation of the 6th Pay Commission, the per cent will increase to 48 per cent of the tax receipts.
This, coupled with the shortfall would mean there could be a cut in development work.
The state’s debt is Rs 1.54 lakh crore.
Due to the high salary cost, the state can only make provision of Rs 10,000 crore every year to pay of the debt principal while Rs 12,000 crore are paid as interest.
However, Walse-Patil said development works would go on unhindered.
“We would like to assure that development activity would carry on unhindered,” Patil said without explaining how. However Mumbaites should brace themselves for further delay in infrastructure products like Mumbai Trans Harbour Link, which are likely to cost Rs 8,000 crore.