GST compensation, Centre’s revenue deficit grant shores up Himachal’s first-quarter revenue

Categories: GST Recent News, News
No Comments

Despite suffering heavy economic losses during the lockdown and the ongoing Covid-19 pandemic, the Himachal Pradesh government earned a total revenue of around Rs 7,000 crore from April to June (first quarter), only four percent less than what it earned in the corresponding quarter last fiscal, according to the state Finance Department.

What offset fall in revenue

The state’s own revenue, tax and non-tax, during this period dipped by around 55 percent, but enhanced revenue deficit grant (RDG) and release of state’s arrears of GST compensation by the Centre helped in increasing the total amount of revenue receipts, said Principal Secretary (Finance And Planning) Prabodh Saxena.

The most pronounced effect of the pandemic has been on taxes on vehicles, which saw an 81 percent decline in the first quarter. Passenger goods tax witnessed a 75 percent decrease, while State GST and VAT are down by 56 and 48 percent respectively. The revenue from excise duty during this period saw a decline of 46 percent.

The enhancement of the RDG by 45 percent and payment of Rs 779 crore by the Centre as GST compensation helped mitigate the state’s own revenue losses, Saxena said. During the first quarter, the central government released Rs 2,857.75 crore to Himachal Pradesh in three monthly installments of the Post Devolution Revenue Deficit Grant as recommended by the 15th Finance Commission, according to the Ministry of Finance.

Himachal’s share in central taxes has remained the same this year, and the total expenditure of the state went up by about 10 percent during the quarter, Saxena said.

The monthly government revenue had dipped by nearly 90 percent in April, when the lockdown was severest and most economic activities were disrupted.

State’s debt liabilities

Even before the pandemic struck India, Himachal Pradesh government was reeling under debts. After presenting the annual budget in early March, Chief Minister Jai Ram Thakur had said that the total debt liabilities of the state were around Rs 55,000 crore. But during this past quarter, the state government took no new loans, the principal secretary said.

According to the Budget, the revenue receipts in this financial year are expected to be Rs 38,439 crore, while the expected revenue expenditure is Rs 39,123 crore. The fiscal deficit is estimated at Rs 7,272 crore, or four percent of the state gross domestic product.

Covid cess on liquor, bus fare hike

To boost revenue, the HP Cabinet had in May decided to levy an additional licence fee, called Covid cess, on sale of liquor in the state. The Cabinet had also decided to hike the import fee on all kinds of spirits used by industries for manufacturing sanitisation products.

Last month, the government increased the bus fares in the state by 25 percent, citing a “fund crunch due to the Covid-19 pandemic”. The move triggered protests and criticism by the opposition Congress, CPI(M), and other organisations. The new fare for ordinary buses is Rs 1.4 per km for the plain areas and Rs 2.19 per km in the hills.

Read More at: