Gujarat says no to new taxes & sops in its interim Budget

State FM says no decision yet on reducing VAT on petroleum products

Keeping in view the upcoming Lok Sabha elections, the Gujarat government on Friday proposed a vote-on-account in the Gujarat Assembly with no new taxes. The state government’s decision to present a vote-on-account assumes significance as Gujarat Chief Minister Narendra Modi is also the Prime Ministerial candidate of the Bharatiya Janata Party (BJP).

“There wasn’t sufficient time to think over the demand of this year. We have, therefore, decided to present and seek a vote-on-account for the period of April 1, 2014 to July 31, 2014 for the state, to enable us to plan in a sustainable manner. The modified Budget would be presented at a later date and the new initiatives under Plan and non-Plan sections of the Budget would be incorporated at that stage,” said Gujarat finance minister Nitin Patel.

Although there was no announcements for the common man, Patel’s Budget speech described in detail the state government’s achievements during the Modi regime.

The state government has also decided not to decrease value added tax (VAT) and surcharge on petroleum products, claiming VAT rates in Gujarat were similar to that in other states and not higher as perceived. It has estimated the total public debt to reach Rs 1.53 lakh crore by end of FY14 from Rs 1.38 lakh crore in FY13.

Patel informed the Assembly that the estimated Budget for FY15 would be Rs 1,20,390 crore with a net surplus of Rs 732.53 crore. He proposed vote-on-account for a period of the first four months of 2014-15; that is till, July 31. The government will seek the House’s approval for a provision of approximately Rs 40,000 crore for this period. The proposal would be put to vote on February 24 after discussion in the House.

“The economic policies of the Union and the states must be complementary to one another. The Union government has decided to present a vote-on-account for FY15 and, therefore, it is appropriate the policies of state governments are also in line with the approach and direction to be taken by the government that is to be formed at the Centre,” Patel said in his interim Budget speech.

The vote-on-account has provisions for expenditure of recurrent nature and existing plan schemes. Total receipts are estimated to be Rs 1,19,527 crore, indicating a rise of 10 per cent over the revised estimates for 2013-14. The revenue receipts are estimated to go up to Rs 95,440 crore, which is 12 per cent higher than the revised estimates of the current financial year.

According to Patel, the estimated plan allocation for 2014-15 was Rs 61,940 crore including extra budgetary resources of Rs 9,729 crore, which mainly include continuous schemes. In 2013-14, the Plan size for the state was Rs 58,500 crore. Development expenditure is estimated at Rs 80,973 crore, up 5.6 per cent from 2013-14 when it was Rs 76,679 crore.

Patel, however, did not give sector-wise estimated allocation of funds for development expenditure, but gave a comparison of allocation compared to 2013-14. Allocation in 2014-15 for women and child development, health and family welfare, tribal and social welfare development has increased by 165 per cent, 159 per cent, 125 per cent and 122 per cent, respectively, over the Plan allocation for FY14.

The finance minister said the budgetary estimates for 2014-15 showed a revenue surplus of Rs 7,697 crore, while fiscal deficit was estimated to be Rs 17,611 crore. The fiscal deficit for the state would be 1.93 per cent of gross state domestic product (GSDP) and was far below the permissible FRBM (Fiscal Responsibility and Budget Management) Act limit of three per cent of the GSDP.

While interacting with mediapersons, Patel was asked if the government was contemplating reducing VAT rate on natural gas. “There is no decision on this at this point of time. Also, let me tell you that VAT rates on natural gas was almost the same in all states of the country. Gujarat is not charging higher VAT for natural gas,” said Patel, justifying the 15 per cent VAT on compressed natural gas.

Terming the interim Budget bland and deceptive, the leader of the opposition party, Gujarat Congress chief Shankersinh Vaghela said the interim Budget was a mere repetition of the governor's speech given on February 20.