Increasing taxes in a major way for the first time since coming to power, the Trinamool Congress government in West Bengal today presented a Budget document for 2013-14.
However, despite taking steps to raise more money, the net revenue deficit increased significantly to Rs 13,308 crore in the revised estimates for 2012-13, against the projection of Rs 6,858 crore in the Budget estimate presented last year. For 2013-14, the net revenue deficit is projected to be contained at Rs 3,488 crore.
Due to reforms in tax collection, the state is expected to marginally surpass its tax collection target to Rs 32,000 crore, against the budget estimate of Rs 31,222 crore last year, said Amit Mitra, finance minister. This year, revenue is expected to grow 24 per cent, to Rs 39,783 crore.
"But the tragedy remains that as Rs 32,000 crore of revenue come into our treasury, Rs 25,000 crore will exit the treasury, simply cut off by RBI (the Reserve Bank of India) to service the massive debt of over Rs 2 lakh crore thrust upon us by the (predecessor) Left Front government," said Mitra.
Among the major tax proposals is, the lower value added tax (VAT) rate has been raised from 4 to 5 per cent while the upper rate of VAT has been increased from 13.50 per cent to 14.50 per cent. The state also raised VAT on tobacco related products and cigarettes from 20 per cent to Rs 25 per cent. Mitra, finance minister, West Bengal, said that the state's tax GSDP ratio for the first time in 15 years had crossed 5 per cent, while the net deficit for the next year was estimated at Rs 8 crore.
Mitra said the ratio of tax to gross state domestic product (GSDP) had crossed five per cent for the first time in 15 years. However, much of the additional taxes would go on servicing the government's debt. Total debt is projected to increase to Rs 247,422 crore by the end of the next financial year, against Rs 226,193 crore, according to the revised estimate for 2012-13. The total expense on loan repayment for 2013-14 is Rs 28,318 crore, against Rs 25,195 crore in the revised estimate of 2012-13.
The total expenditure on three heads-salaries, pension and other retirement benefits, and subsidy-is Rs 45,431 crore. The total plan outlay proposed in the budget is Rs 26,674 crore, 14.1 per cent higher over last year.
Mitra, who had called on the Prime Minister and Union Finance Minister, along with Chief Minister Mamata Banerjee, for a moratorium on interest payment, but was denied, today took on Centre. "While 90 million people of this state are left in a financial abyss, the Government of India pledged over Rs 50,000 crore to the International Monetary Fund (IMF) for helping the Euro Zone to come out of a financial crisis, This is really sad," said Mitra.
The budget also proposes a number of concessions to small traders. Small resellers and work contractors with annual turnover less than Rs 50 lakh have been exempted from purchase tax. The government has also initiated a simplified tax filing and return process.
For example, it has dispensed with the requirement of maintenance of stock registers for the availing input tax credit, expected to benefit unorganised traders. The turnover ceiling for self-audit among small taxpayers has been raised from Rs 3 crore to Rs 5 crore.
In the case of professional tax, the system of compulsory assessment is sought to be done away and an amnesty scheme was announced for registered employers and persons who'd defaulted in payment. The exemption limit for salary and wage earners is to be raised from Rs 5,000 to Rs 7,000 a month.
For 2012-13, GSDP grew 7.6 per cent, said Mitra. He said industrial growth in the state in the present financial year was 6.2 per cent and services grew 9.5 per cent. West Bengal received investment proposals amounting to Rs 1,12,769 crore in 257 units since May 2011, said the minister.
West Bengal Chief Minister Mamata Banerjee described the budget as, "an attempt to grow trees in a desert, to create greenery in a desert".
In a deviation from the usual practice, the state finance minister did not address the media after his speech. Last year, the post-Budget press conference was addressed by the chief minister, with Mitra by her side. This year, industry minister Partha Chatterjee took questions from the media.
- Rs 2,47,422 cr is the total debt projected by next financial year
- 14.5 % is the higher VAT rate, while lower rate is 5%
- Rs 13,308 cr is the net revenue deficit, against the projection of Rs 6,858 crore
- Rs 28,318 cr is the total expense on loan repayment for the next financial year
- Rs 26,674 cr is the total plan outlay proposed, 14.13% higher over last year