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Revenue shortfall sees State fiscal deficit soaring

BS Reporter  |  Chennai/ Bangalore 

Chief Minister on Friday presented a for 2010-11, albeit a small one of Rs 51.4 crore, despite a deficit budget of Rs 44.8 crore for the fiscal. However, the budget estimates for 2010-11 projects a fiscal deficit of Rs 9,708 crore, though the revenue surplus may be Rs 500 crore.

With respect to the gross state domestic product the fiscal deficit will be up, at 2.96 per cent as against 2.88 per cent (Rs 8,493 crore) this year as per the budget estimates. However, the revised estimate for the current fiscal pegs the fiscal deficit at Rs 11,266 crore or 3.77 per cent of the

The deterioration in the fiscal deficit is owing to a shortfall of 9.3 per cent in receipts at Rs 55,381 crore in the revised estimates for 2009-10, compared to budget estimates. This is on account of a shortfall in both the state’s own tax revenue which is down 10.3 per cent at Rs 29,338.7 crore, and its share of central taxes, down 8.5 per cent at Rs 7,000 crore for 2009-10.

This revenue shortfall from the targeted level has been partially made up by spending less. Revenue expenditure is down 2.8 per cent to Rs 45,867.8 crore in the revised estimates compared to the budget estimates for 2009-10. However, this has not dimmed ambitions and in the coming year (2010-11) the plan expenditure is projected to go up 15.8 per cent to Rs 53,138.2 crore.

The total plan size for the year 2010-11 has been enhanced by 5 per cent to Rs 31,000 crore compared to 2009-10. Of this, Rs 17,636 crore and Rs 13,364 crore will be allocated for capital and revenue expenditure respectively.

The chief minister has proposed to make a rise of 1 per cent in the rate of value added tax (VAT) to 13.5 per cent from 12.5 per cent and to 5 per cent from 4 per cent on all goods to raise Rs 1,829 crore of additional resources and eliminating a deficit of Rs 44.80 crore in this fiscal (2009-10). on hotel rooms would be increased by 2 per cent.

“I propose to increase to 8 per cent from 6 per cent on hotel room rent of Rs 1,000-2,000 and to 12 per cent from 10 per cent on rooms with a daily rent of above Rs 2,000,” Yeddyurappa, who also holds the finance portfolio, said.

on declared goods like iron and steel, oil seeds, cotton, among others will continue to be levied at 4 per cent.

Taking a cue from Finance Minister Pranab Mukherjee, who raised taxes on tobacco products, the chief minister has increased on tobacco to 15 per cent from 12.5 per cent at wholesale and retail level.

Yeddyurappa has proposed to collect an entry tax of 1 per cent from sugar factories instead of from distributors. The government expects to mop Rs 1,480 crore from luxury tax, and entry tax on sugar.

The chief minister, however, spared the liquor industry of new tax burdens, as the revenue target of Rs 6,565 crore for fiscal (FY 2010) is likely to be surpassed by about 20 per cent to post Rs 7,878 crore.

First Published: Sat, March 06 2010. 00:44 IST