70% revenue shortfall in Rajasthan, finances in bad shape
The state targeted to earn Rs ,6800 crore through tax and GST compensation, and Rs 1,600 crore of non-tax revenue, which is primarily royalty from mining and petroleum activities.Updated: Apr 29, 2020, 22:50 IST
The revenue collection in Rajasthan in the first month of the 2020-21 fiscal has fallen by 70% as on Wednesday even as it fights the coronavirus disease (Covid-19) outbreak, said officials of the state finance department. There was a shortfall of Rs 18,000 in revenue in the last fiscal, 2019-20, they added.
“We set out for Rs 8,400 crore in April and have been able to achieve only Rs 1800 crore. In March also, there was a shortfall of Rs 3,500 crore. This has put us in a fiscal crisis to tide over which the chief minister, who is also the finance minister, has requested the Centre for a package,” said Niranjan Arya, additional chief secretary of finance, taxation and excise department.
The state targeted to earn Rs ,6800 crore through tax and GST compensation, and Rs 1,600 crore of non-tax revenue, which is primarily royalty from mining and petroleum activities.
Rajasthan has allocated around Rs 1,200 crore on Covid-19 related expenses, including that on providing free PDS wheat to beneficiaries of National Food Security Act (NFSA).
The Centre had recently given Rs 500 crore as GST compensation for January, while Rs 2,482 crore for February and March is pending, said another official of the department, who requested anonymity. The Centre compensates states for GST shortfall every two months.
The biggest drop in tax revenue was seen in stamps and registration and vehicle tax because there was virtually no sale of property and vehicles, he added. The target for stamps and registration for April 2020 was Rs 466 crore; the state got only Rs 6 crore. Similarly, for vehicle tax, the target was Rs 500 crore, and the state has managed to collect only Rs 8 crore, which is a little more than 1 per cent.
Arya said the state entered into a new financial year with a shortfall of Rs 18,000 because of a general slowdown of economy. “Loss of 70 per cent of April revenue will bleed our coffers,” he added.
The state government deferred a part of salaries of legislators and its employees, including the all-India services officers, such as IAS and IPS, in March. Seventy-five per cent salary of legislators, 50 per cent salary of AIS officer and 30 per cent of state administrative officers was deferred. Five days of salary was deducted as donation to the Chief Minister’s Relief Fund for Covid-19. As the date for disbursement of April salary nears, the finance department is staring at a crisis.
Rajasthan chief minister Ashok Gehlot has demanded from Centre a stimulus of Rs 1,00,000 crore for the state. This can be distributed to the state according to the states’ share in central taxes. Gehlot has also requested for raising the limit of borrowing from open market, which is currently 3 per cent of the state GDP for Rajasthan; the CM wants this to be raised to 5 per cent.
Arya said the state’s GDP is around Rs 11,00,000 crore. The 2 per cent raise will enable the state to borrow around Rs 20,000 more from open market. He said the CM has also requested for a raise in the wage and means allowance advance from Reserve Bank of India (RBI).
To tide over the fiscal crisis, chief minister Gehlot has sought a moratorium of six months on repayment to RBI and other financial institutions. Another demand of the state government from Centre is compensation of GST until 2027; currently, the GST is to be compensated to states until 2022.