The Hindu Business Line : Tax collections in Karnataka fall short of estimates

State Government data showed that the collections during the first seven months for this fiscal year (2004-05) was Rs 8,200 crore or about 54 per cent of the budgeted estimates of Rs 15,012 crore. The estimates included the infrastructure cess.

The shortfall in commercial taxes was at least Rs 47 crore, though the highest drop was in motor vehicle taxes and excise duties. As against the budgeted targets, the collections in commercial taxes, which included sales tax receipts was Rs 5,142 crore for the first 7 months. Collections of state excise duties were Rs 1,422 crore or about 53 per cent of the budgeted estimates and shortfall of at least Rs 37 crore for the fiscal year. Similarly motor vehicle tax collections at Rs 545 crore were short by at least Rs 146 crore.

Besides the State Government has not been able to rein in expenditure. The expenditure increase was mainly on account of the increase in non-plan expenditure, revenue expenditure. This included subsidy, wages and interest costs. The State Government this year has been hit by the increase in interest rates on borrowings. Besides, this year, only a small quantum of debt swaps have been done. This implied that some of the high-cost borrowings still continued to be on its books.

Moreover, with interest rates on the ascent, the borrowings costs for fresh borrowings have increased since the last fiscal year. Interest servicing costs of borrowings of the state development loans increased by at least 150 basis points since the last fiscal year. At present the costs are in the region of 7 per cent.

Accordingly, this also meant that the State was likely to face slippages in meeting the fiscal deficit targets. The fiscal deficit target under the medium-term Fiscal Plan is 3.08 per cent of the gross state domestic product for the current year. But parts of northern and central Karnataka have been experiencing drought in three consecutive years. As a result, the SDP growth estimate of 17 per cent to Rs 1,61,840 crore appeared far too optimistic, according to State Government officials.

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page