Fall in revenue receipts, delay in GST compensation, add to trouble says GIFT study
Kerala’s borrowing has increased substantially by 112% to meet its high expenditure needs. A fall in revenue receipts to the tune of ₹81,180.5 crore from the budget estimate of ₹1,14,636 crore is predicted during 2020-2021 due to the impact of COVID-19 on the State economy.
The State’s revenue deficit will be ₹33,333.9 crore even after obtaining the full revenue deficit grant of ₹15,323 crore from the 15th Finance Commission. To meet the budgeted revenue expenditure and the additional expenses necessitated by COVID-19, the State has to resort to borrowing. With the enhancement of borrowing limit of States from 3% of the Gross State Domestic Product (GSDP) to 5%, the State is to get a fiscal space of ₹18,087 crore.
The delay of the Union government in filling the revenue gap through the timely disbursement of the Good and Service Tax (GST) compensation has adversely affected the fiscal space of the State.
Fiscal deficit figured as per the accounts during 2018-2019 is 3.4% of the GSDP which is above the Fiscal Responsibility and Budget Management Act (FRBM) ceiling of 3%, according to L. Anitha Kumary and N. Ramalingam, Associate Professors, Gulati Institute of Finance and Taxation (GIFT).
Though this is budgeted as 3% during the next two years, the experts say in the analysis titled “Dwindling revenue and galloping expenditure in pandemic times” that due to COVID-19 impact, the likelihood of not meeting the target is more.
Tax revenue hit
A flat 30% fall of revenue receipt has been noted in the provisional accounts. The State has lost ₹5,715 crore in the first quarter of 2020 compared to the same period in 2019. Tax revenue within the revenue receipt has seriously hit by a shortfall of 51% due to the lockdown.
The revenue expenditure has swelled by 15% in the first quarter of 2020 compared to 2019. A rise of 66.7% in the case of subsidy expenditure and 21.8% in capital expenditure has been noted along with the borrowings going up by 112%.
Revenue deficit up
Revenue deficit has shot up disturbingly to 138.9% in the first quarter of 2020 compared to the same period in 2019. Fiscal deficit shows an alarmingly 112.9% during the first three months of 2020. For the State, mobilisation of own revenue has become a pressing issue.
Source: Read Full Article