Govt may cut spendings as revenue collection dips

Many Centre-sponsored schemes likely to face fund shortage

The Siddaramaiah government is understood to have been preparing for a major cutback in expenditure and moderation of low-priority budgetary schemes and programmes in the wake of economic downturn hitting its revenue.

As per the revenue and expenditure figures released by the Finance department for the second quarter of the financial year, the revenue collection, especially from the four major tax sources of commercial taxes, excise, stamps and registration and motor vehicle taxes, has not been not been on the expected lines.

The government has been able to achieve only 39.7 per cent (Rs 38,940 crores) of the full year target for the revenue receipts (Rs 97,986 crore). Collection in the corresponding period of the previous year was 45 per cent against the full-year target.

The total outlay of the revised budget 2013-14 is Rs 1,21,611 crore. Performance of the State economy in terms of revenue collection in the first two quarters of the current fiscal is worse than that of the last two years.

Over and above, there is a negative growth as far as devolution of funds and release of grants from the Centre, compared to last year, leading to concerns that even many of the Centre-sponsored schemes would face fund shortage.

‘Blow to government’

Commercial taxes, which is the major own tax revenue source, and motor vehicle taxes have dealt a blow to the government.

The collection in commercial taxes till September is Rs 17,314 crore against the full-year target of Rs 37,740 crore, while in motor vehicle taxes, the government has collected Rs 1,793 crore against the yearly target of Rs 4,120 crore.

It will be difficult to reach the full-year revenue target in commercial taxes and motor vehicle taxes if the same trend continues in rest of the year, officials sources said.

Interestingly, non-tax revenue collection (fees and penalties collected on different services provided by various government departments like tuition and other fees of technical education, fees collected for issuing various revenue records, mutation fee, KPSC examination fees, fines for traffic offences, toll on roads and urban health services) too has been badly affected.

The government has been able to collect Rs 1,603 crore against Rs 1,645 crore collected in the corresponding period of last year. 

Big-ticket schemes

The government is keeping its fingers crossed as it has a herculean task of financing big-ticket subsidy programmes like Anna Bhagya and Ksheera Bhagya and loan waiver for backward classes and minorities. The total cost of subsidy has shot up to Rs 14,500 crore this year from Rs 10,400 crore in the previous fiscal.

The Finance department, as a result, is seriously contemplating cutting down its expenditure, especially non-productive ones in coming days. It is also planning to tighten the belt by strictly implementing the economy measures, sources said.

The government has very limited options for additional resources mobilisation. The government actually is not in favour of taking any harsh measures in view of the crucial 2014 Lok Sabha elections, sources added.

When contacted, Finance department deputy secretary (budget and resources) D Randeep, however, said the economy is expected to pick pace in the third and fourth quarters and the department is confident of reaching the revenue target by the end of the financial year.