State’s own tax revenues show improvement

Growth rate may cross 10 per cent by end of March

The Telangana government, which is worried over the significant fall in its revenue growth rate, seems to be recovering with the boost given by the festival season starting with Dasara and Deepavali.

The State’s own tax revenue growth compared last fiscal that was just below 3% till November-end, has now climbed to 9.1% by the end of December 2019, mainly due to hike in liquor sales during the festival season and through the New Year.

The State now hopes to end the financial year 2019-20 by registering about 10% increase in its own tax revenue. It will still be an achievement when the nation’s economy is growing at only 5%. The Goods and Sales Tax growth is also expected to be around 10%.

Telangana was among the few States that clocked GST growth rate of over 14% and peaked to 21% after the new tax regime was introduced in 2017 till this financial year when its growth rate fell steeply. The State thus became eligible for GST compensation for the first time since inception of GST and so far ₹1,900 crore was released to the State in two instalments.

Revenue earners

Against the State’s own tax revenue target of ₹75,000 crore by end of March, the State has so far realised ₹51,500 crore. On account of recovery in the last two months the gap could be narrowed, according to sources.

The revenue generating departments like Transport registered 8% growth till December-end over that of corresponding period last year while Stamps and Registration revenue grew at 10%, excise at 23% and Commercial Taxes at over 6% resulting in an average growth of over 9%.

Loan repayments

Meanwhile, sources said that the negotiations of the State with the RBI officials to reschedule the repayment of loans raised through market borrowings will not bring down the interest burden as interest has to be paid every quarter for all the loans, including fresh loans. The benefit in rescheduling of loan repayment lies in the principal repayment amount being spread uniformly across the year instead of ballooning of loan repayments during some months and enable the State to plan its expenditure on its programmes and projects through out the year. “The State seeks to calibrate its repayment of its principal component so that it can spread its resources uniformly ensuring harmony between loan repayments without affecting its committed expenditure,” sources said.

The States are allowed by the RBI to avail 75% of loans they are entitled to under the Fiscal Responsibility and Budget Management norms before nine months and the rest of 25% in the last quarter. Since many States will also be seeking loans in the last quarter, each State has to schedule when it will raise market loans through auction of bonds at a reasonable interest.

Finance Secretary went to Mumbai to attend meetings with RBI officials apparently to discuss the above issues.

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Printable version | Feb 24, 2020 6:32:16 PM |

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