The kind of teaser announcements coming out from the government every other day in the run up to the finalisation of budget proposals, one can safely expect a mega budget again for 2017-18.
In 2015-16, it was Rs.1.15 lakh crore budget and this year it is Rs.1.3 lakh crore. Similarly, the 2017-18 budget also is likely to to be on the higher side.
“Government has clarity on how to raise resources,” is all one is willing to say.
Sources point out that the State had been fairly good in spending the allocated amount. Last year, the gap in the revised expenditure was only 15% of total outlay. Budget expenditure ranging between 75 to 90% is generally rated as good - as budget proposals are always on optimistic side, they justify.
Notwithstanding the hit to the business transactions for a couple of months after the demonetisation move in November, business picked up gradually in the State. But the kind of growth that was witnessed till November 2016 at 19.5%, particularly in Value Added Tax revenue, excise and stamps and registrations, could not be achieved in the later part of the financial year.
Widening tax base
The government, post-demonetisation, saw an opportunity to widen the tax base by promoting cashless transactions in a big way. Chief Minister K. Chandrasekhar Rao himself became a votary of cashless transactions, and a pilot project was launched in Siddipet to promote 100% cashless transactions and encouraged PoS machines, debit, Rupay, Paytm and other applications.
The momentum of cashless transactions in the last couple of months, however, slowed down as the RBI eased restrictions on cash withdrawals with more new currency coming into circulation. The result, people have been reverting back to the comfort of cash transactions, a mode they are used to since ages.
“The government had a good chance to make people, traders stick to cashless transactions by announcing incentives in a pro-active manner. Cashless transactions are now mandatory only for high-value purchases, with details of PAN card,” government sources said thus watering down government’s hopes of widening the tax base.
Challenging task
It will be a challenge to make allocation for various new welfare schemes as well as ongoing flagship infrastructure projects.
“Uniform Goods and Services Tax is what government is apparently banking on to generate greater tax revenues as it ensures every business to maintain authentic books as it becomes easy to claim input tax credit either from the State or the Centre. The GST experience around the world led to increase in tax base,” sources added.
