State revenue up 5 per cent till November against FY2014 budget of 17.4 per cent: Report
Mumbai: The growth rate of combined revenue receipts There has been a decline of almost 80 per cent to 5 per cent during April-November in the 16 largest states Budget According to a report, 17.4 percent for the current financial year. States have so far borrowed 37 percent more than last time fiscal And given these poor figures, they will have to borrow heavily this financial year to service their debt and pay salaries and pensions.
This decline is due to contraction in sales tax and below-budget growth of State Goods and Services Tax (SGST), Excise and Stamps and Registration collections during this period, limiting the growth of State Own Tax Revenue (SOTR). Has been. 11 percent. ICRA Ratings said in a report that another reason for the poor numbers is the sharp decline in central grants.
Although the agency expects tax transfers to increase in the fourth quarter, its volume may not be sufficient to fully offset the shortfall in grants.
Moreover, even if the Center releases a larger share of grants to states in the fourth quarter, the actual growth of combined revenue receipts is still expected to lag the targeted growth rate by a large margin, Icra said in the report, which It does not include the North-Eastern and hilly states, Goa and Bihar.
In the first eight months of FY24, the combined SGST, excise duty, stamp duty and registration fee collections of these sample 16 states grew by 10-12 per cent.
However, sales tax collections declined by 1.4 per cent during the period, limiting SOTR growth to 11 per cent relative to the budgeted 20 per cent.
Overall, combined sales tax collections during the period under review were equal to 55 per cent of the budget estimate, which suggests that actual collections for many states will fall well short of the budget target.
“Central grants to 13 out of 16 states contracted year-on-year during the reporting period, resulting in a combined decline of 31 per cent in grants in the sample states, while they have budgeted a massive increase of 19.8 per cent. While we agency While it is expected that the actual tax devolution will exceed the budgeted amount by Rs 30,000 crore for FY2024, it will not be enough to bridge the shortfall in grants, it said.
If a larger share of the expected grants is released to states in Q4, this would reduce the pace of contraction, and combined revenue receipts growth could be marginally higher at 5 per cent in the first eight months, well above the target of 17.4 per cent. Will remain below. Percentage increase.
With 50 per cent share, SOTR is the largest revenue head of the state, followed by tax transfers at 25 per cent, central grants at 17 per cent and non-tax revenue at 8 per cent. The STOR pie comprises the following 40 per cent GST, sales tax (mostly on fuel and liquor) is 24 per cent, 14 per cent comes from excise duty, 11 per cent each from stamp duty and registration fee and other items.
SGST collections of 12 states grew by 9-15 per cent during the period under review, while in Kerala, it grew by 5 per cent against its budgeted 28 per cent.
After growing by 10.4 per cent in FY2012 and 13.4 per cent in FY2013, petrol consumption declined by 6 per cent during the first eight months of FY24. Similarly, after increasing from 5.5 per cent in FY2012 to 12 per cent in FY2013, diesel consumption declined to 6.7 per cent in the first eight months.
This decline is due to contraction in sales tax and below-budget growth of State Goods and Services Tax (SGST), Excise and Stamps and Registration collections during this period, limiting the growth of State Own Tax Revenue (SOTR). Has been. 11 percent. ICRA Ratings said in a report that another reason for the poor numbers is the sharp decline in central grants.
Although the agency expects tax transfers to increase in the fourth quarter, its volume may not be sufficient to fully offset the shortfall in grants.
Moreover, even if the Center releases a larger share of grants to states in the fourth quarter, the actual growth of combined revenue receipts is still expected to lag the targeted growth rate by a large margin, Icra said in the report, which It does not include the North-Eastern and hilly states, Goa and Bihar.
In the first eight months of FY24, the combined SGST, excise duty, stamp duty and registration fee collections of these sample 16 states grew by 10-12 per cent.
However, sales tax collections declined by 1.4 per cent during the period, limiting SOTR growth to 11 per cent relative to the budgeted 20 per cent.
Overall, combined sales tax collections during the period under review were equal to 55 per cent of the budget estimate, which suggests that actual collections for many states will fall well short of the budget target.
“Central grants to 13 out of 16 states contracted year-on-year during the reporting period, resulting in a combined decline of 31 per cent in grants in the sample states, while they have budgeted a massive increase of 19.8 per cent. While we agency While it is expected that the actual tax devolution will exceed the budgeted amount by Rs 30,000 crore for FY2024, it will not be enough to bridge the shortfall in grants, it said.
If a larger share of the expected grants is released to states in Q4, this would reduce the pace of contraction, and combined revenue receipts growth could be marginally higher at 5 per cent in the first eight months, well above the target of 17.4 per cent. Will remain below. Percentage increase.
With 50 per cent share, SOTR is the largest revenue head of the state, followed by tax transfers at 25 per cent, central grants at 17 per cent and non-tax revenue at 8 per cent. The STOR pie comprises the following 40 per cent GST, sales tax (mostly on fuel and liquor) is 24 per cent, 14 per cent comes from excise duty, 11 per cent each from stamp duty and registration fee and other items.
SGST collections of 12 states grew by 9-15 per cent during the period under review, while in Kerala, it grew by 5 per cent against its budgeted 28 per cent.
After growing by 10.4 per cent in FY2012 and 13.4 per cent in FY2013, petrol consumption declined by 6 per cent during the first eight months of FY24. Similarly, after increasing from 5.5 per cent in FY2012 to 12 per cent in FY2013, diesel consumption declined to 6.7 per cent in the first eight months.
