ALSO READWest Bengal will lose tax collection power if it misses date with GST GST structure to hurt SMEs, won't accept in its current form: Mamata West Bengal tops GST enrolment chart at 89.3% so far GST to bring back 'Inspector Raj': Mamata Banerjee on arrest clause Not just MSMEs, even exporters hit by GST in West Bengal: Amit Mitra
West Bengal’s revenue collections have increased by 14-15 per cent in the month of July following the implementation of the goods and services tax (GST), according to government officials. According to government sources, there were around 1,05,389 new registrations under the new GST regime that came to force on July 1. Moreover, around 2,42,572 tax payers migrated to GST in a month’s time, said officials. Traders who were so far beyond the state’s tax net have registered themselves under GST, thereby, adding Rs 2,990 crore to the state’s coffers in July, claimed senior tax officials. Among the fresh entrants are jewellers, textile traders and medicine shop owners, among others. Over the last few years, the West Bengal (WB) government has increased tax collection through better compliance. The state expects to earn Rs 55, 787 crore from tax collection in the current financial year, marking an increase of around 14 per cent when compared to last year’s figure of Rs 48,927 crore. In fact, WB has seen a nearly 50 per cent increase in tax revenue collections in the past five years. During 2012-13, the state’s tax revenue was around Rs 32,808 crore. However, much of the positive impact due to increased tax collection is expected to be negated by the high debt burden of the state that stands at around Rs 45,350 crore (principal plus interest) for the year 2017-18. In fact, West Bengal’s debt servicing burden itself (counted as revenue expenditure) stands at around Rs 26,243 crore, or a little less than half of its own revenue collection. “West Bengal has been in a viscous debt trap and has been using market borrowing for loan repayments. We are borrowing Rs 40,000 crore, out of which we have to refund Rs 28,000 crore as interest,” said Amit Mitra, the state’s finance minister in an interview posted on the website of the ruling party— the All India Trinamool Congress (TMC).What is more worrisome for the state is the high interest it faces in case it fails to meet the debt repayment schedule. Repayment burden on account of market loans would increase to around Rs 11,610 crore in 2017-18, from Rs 3,200 crore in the year-ago period. In fact, on an average, the share of market loans or state development loans for WB in its total debt burden has been close to Rs 3,000 crore every year. Also, its market loan repayment obligation would be the highest among all states in FY8. The central government had in 2013 announced a debt-swap scheme, which allowed state governments to replace high-cost borrowing with low-cost ones from small savings pool and market borrowing. West Bengal, however, did not participate in the scheme. Moreover, states have been borrowing heavily through market loans since 2007. The borrowings were mostly through state development loans, which had a maturity period of 10 years, and mostly subscribed by public sector banks and other government undertakings. West Bengal’s revenue deficit as a percentage of its Gross State Domestic Product (GSDP) has been coming down due to tax collection efficiency. From around 2.1 per cent in 2014-15, it is expected to be zero this financial year, according to Reserve Bank of India data.