Financial Daily from THE HINDU group of publications
Thursday, Jun 13, 2002
Industry & Economy
Resource mobilisation in AP -- User charges on more services likely
V. Rishi Kumar
HYDERABAD, June 12
AS part of the reform process and ongoing exercise for resource mobilisation across sectors, the Andhra Pradesh Government has zeroed in on `user charges' as one of the important source. It is planning to make them index-linked.
Towards this end, all revenue-earning departments are being re-oriented to be modern, efficient and user-friendly agencies capable of making scientific and accurate analysis of the revenue potential in their respective fields.
The Government, which is simultaneously working towards enhancing enforcement capabilities to ensure effective compliance of tax laws, feels that these user charges have the potential to shore up revenues, according to Government sources.
Apart from streamlining tax administration on these lines, there is tremendous scope for improving non-tax revenues especially, user charges and cost recovery, particularly when it is directed towards clearly demarcated public services.
The Government is gradually veering towards this as it is felt that it can recover costs from users so that the services are individualised and users can be identified and charged according to the extent of their usage.
The thinking on these lines was initiated based on the philosophy that while the costs of providing services had been increasing, fees and user charges have remained virtually frozen in nominal terms for years.
As a result, the Government opined that the implicit subsidisation has increased, draining Government budgetary resources and getting ultimately financed by borrowing. Therefore, it is felt that user charges have to be index linked and the process of periodic revision should become automatic.
At a recent review meeting on user charges, it was decided to persuade users to pay up if the quality of services is commensurate with the price and the delivery of the services is cost-efficient. However, these users will not be made to pay for the inefficiency of the public agencies.
The Government, while recognising the need to make the system more friendly and cost-efficient, has decided to permit the concerned departments to mobilise their own resources and retain with them the amounts so collected to improve services.
Further, the retention of user charges is also related to the existing initiatives to allow more revenues to be retained and utilised directly by concerned public agencies.
One of the challenges the Government sees is the need to educate users about the thinking behind the charges.
The Government wants people to enjoy service benefits and gradually to veer around to this thinking. It is now seeking to convince people that the user charges do not go to Government or department kitty, but get deployed into the system for better services.
The Government has also sought to make it clear to concerned departments that they understand the distinction between tax and non-tax revenue receipts and the concept of user charges levied for providing improved quality of public services.
With a recent order, the State Government has directed that it is now essential that the amount of user charges collected by the departments, which is to be retained, are required to be shown separately in the budget as this will bring in uniformity and also clearly spell out the revenue stream.
Host of services medical and health, education, police, public services, water supply, sewerage and sanitation, power are all planned to be covered under the proposed system of collection of user charges.
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