No reduction in VAT on fuel, says Gujarat FM on state budget for 2021-22

State estimates GST shortfall of Rs 25,000 cr

Announcing the state budget for 2021-22 with a surplus of Rs 588 crore without any change in taxes, Gujarat deputy chief minister and finance minister Nitin Patel on Wednesday said that the government would not be reducing value added tax (VAT) on petrol and diesel.

Talking to mediapersons on Wednesday post budget, Patel said that the state's VAT on fuel was lower than 14 other states and hence, the government had no plans of reducing the same. Patel presented the budget with a size of Rs 2.27 trillion, up by Rs 9,742 crore from 2020-21 while making major provisions for education (Rs 32,719 crore), health and family welfare (Rs 11,323 crore), urban development (Rs 13,493 crore), and energy and petrochemicals (Rs 13,034 crore), among others.

For the year 2020-21, overall Goods and Services Tax (GST) collections are estimated to be down by 10 per cent over previous year, with a shortfall of roughly Rs 25000 crore, which Gujarat expects to be partially compensated by Cess income of about Rs 6,000 crore and Central loan of about Rs 9,200 crore. According to Patel, the shortfall in GST collections for 2020-21 will be on account of COVID-19 lockdown implications.

However, while the shortfall remains, the GST collections have turned surplus to touch record high of Rs 3,514 crore in February, 2021, the finance minister informed. GST shortfall was fell from 40 per cent in April-June quarter to 15 per cent in July-September quarter of fiscal 2020-21, followed by surplus of five per cent in third quarter of FY21, indicating economic recovery at pre-Covid levels, Patel added.

Gujarat's public debt is set to rise to Rs 3.78 trillion by the end of fiscal 2021-22, up from Rs 2.67 trillion as on March 31, 2020. While revised estimates showed that during the current fiscal 2020-21 Gujarat had raised Rs 61,008 crore in public debt, the state will raise another Rs 50,501 crore in public debt for the fiscal 2021-22.

Other key allocations include Rs 1,000 crore as interest subsidy on loans taken by farmers in the state, Rs 7,370 crore on Narmada project, Rs 3,974 crore for water distribution related infrastructure, Rs 2,385 crore on infrastructure in rural areas, Rs 1,250 crore to build 100,000 houses under PM Awas yojana and Rs 900 crore to build 55,000 houses in urban areas.

Patel also allocated Rs 652 crore for Statue of Unity Area Development, Rs 568 crore for metro rail projects in Ahmedabad, Surat and Gandhinagar, along with Rs 50 crore to plan for metro rail projects in the cities of Vadodara, Rajkot, Bhavnagar and Jamnagar.

The state, which has 124,000 km of surfaced roads, plans to spend over Rs 9,600 crore on widening of over 5,200 km of roads and Rs 1,453 crore for six-lane between industrial hotspots of Dahej and Hazira-Surat.

Meanwhile, Gujarat will be setting up two mega textile parks under the scheme of Government of India. Moreover, a bulk drug industrial park will be set up in Jambusar taluka of Bharuch district, flanked by raw material makers in Ankleshwar and Dahej. Patel also announced a Medical Device Industrial Park to be set up at Rajkot, which is a cluster of engineering tools and equipment manufacturing.