In the document ‘Mid-term review of State finances for the year 2007-08’, the finance minister said the position regarding the state’s own tax revenues showed a likely shortfall in the realisation under commercial taxes to the extent of Rs 500 crore and stamps and registration to the extent of Rs 588 crore.
“This is mainly attributable to the lower realisation on sales tax and entry tax on petrol and diesel and the striking down of the Karnataka special entry tax on certain goods Act by the Karnataka High Court in March 2007”.
Besides, there was a reduction in the estimated number of documents coming up for registration due to a slowdown in the real estate market.
However, there is no need to be alarmed. According to the document, the shortfall under these tax revenues were likely to be made up by an increase of about Rs 1,370 crore in the state excise due to higher sale of India made liquor.
Motor tax collections
Also collections under the motor vehicle tax are likely to exceed the budget estimates by about Rs 245 crore. In the aggregate, the state’s own tax revenues are likely to exceed budget estimates by Rs 527 crore.
The mid-year position of receipts of grants in aid and contributions from the Centre was Rs 565.88 crore for the year against the budget estimates (BE) of Rs 5913.82 crore.
These estimates for the year were to be revised downwards from the figures projected in the BE mainly on account of less than anticipated receipts under the State Plan grants and grants under the CSS.
The anticipated shortfall in receipts projected for the National Urban Renewal Mission, Urban infrastructure for development of small and medium towns scheme and the CSS for rejuvenation of tanks was the main reason for the Centre’s grants-in-aid for state being reduced in the mid-year estimates.
The reduction in grants in aid and contributions from the Centre for the year was estimated to be of the order of Rs 394 crore.
Less grant in aid
The reduction happened because the 12th Finance Commission has recommended that the financially well-performing states such as Karnataka would get less grants in aid, official sources said.
The document said, taking into account the net transaction under the consolidated fund, contingency fund and public account along with an opening balance of Rs 231 crore, the financial year 2007-08 was expected to close with a balance of Rs 58.32 crore as compared to the BE of Rs 73.31 crore.
The expected revenue surplus for the year was estimated at Rs 2,981.5 crore as against the BE of Rs 1,626 crore. The fiscal deficit is estimated to be Rs 6,086 crore.