E-Paper
Fuel tax cut: UP may have to reduce expenses, borrow funds
The UP state government, which is already facing a resource strain, may have to reduce expenditure further or opt for additional borrowings to fund development works in the coming months and make up for the ₹4000 crore loss on account of the decision to slash tax on fuel.
The UP state government, which is already facing a resource strain, may have to reduce expenditure further or opt for additional borrowings to fund development works in the coming months and make up for the ₹4000 crore loss on account of the decision to slash tax on fuel.
“Yes, the state government will have to find new ways to make up for an estimated ₹4000 crore per year loss of revenue. We have to take a decision on the issue soon,” said a senior officer on condition of anonymity.
After announcing ₹2.50 cut in taxes on petrol and diesel, chief minister Yogi Adityanath on Thursday said the state government would lose ₹4000 crore per annum due to the tax cut.
He said the state government would have to mobilise other resources to generate additional revenue to make up for the loss.
As the 2019 Lok Sabha elections are inching closer, the state government will not be able to levy additional duty or tax to make up for the revenue loss in the coming months. “Under such a scenario, a further cut in expenditure and the option of additional borrowings to fund development projects are not ruled out,” said another officer.
The state government had got a budget of ₹4.28 lakh crore (2018-2019) passed in the state legislature. It also got approval to a supplementary budget of ₹34833.24 crore in the same financial year to fund some important development projects ahead of 2019 Lok Sabha elections.
Will the state government have resources to fund the budget? It was able to fund only ₹3.05 lakh crore (79.2 percent) of ₹3.85 lakh crore it had got approved for 2017-2018.
The state government had recently announced austerity measures for optimum utilization of resources and keeping expenditure in check. It decided not to create any new posts in any department, barring the medical and health and the police. It decided to scrap all unproductive posts and hire staff only though outsourcing in unavoidable circumstances.
It also decided to allow only economy class air travel and not hold any government functions, conferences and seminars in private hotels. It further decided not to host official dinners in five-star hotels.
The state government’s borrowings have witnessed an upward trend over the years. Its total borrowings were ₹157,016.25 crore in 2008-2009 and are expected to reach ₹443,362.52 crore on March 31, 2019. The state government had spent 13.9% of revenue receipts on debt servicing in 2017-2018. The budgetary estimates indicate that the debt servicing may go up to 15.2% of revenue receipts in 2018-2019. The state government’s total borrowings are expected to go up further if immediate measures were not initiated to mobilise additional resources to fund development in the coming months.
