Mumbai: Under pressure from the ₹34,000-crore farm loan waiver, six government departments — Revenue, Home, Transport, Excise, Medical Education, and Law and Judiciary — have moved to raise taxes and duties.
An internal report of the Finance department prepared to assess the economic health of the government says the move is an attempt to fetch additional revenue. “The six departments have sent proposals to the Cabinet to increase fee and duties along with other plans to mobilise additional revenue.”
Maharashtra joined Uttar Pradesh, Karnataka and Punjab to announce the waiver recently. The State has over ₹4,00,000 crore in debts and a recent fiscal report by India Ratings warned that the waiver will push the State’s fiscal deficit to 2.71% of the gross state domestic product (GSDP) in the financial year 2018. The report has also estimated a rise in debt/GSDP at 17.44% over a budgeted 16.26%.
The departments have also been asked to prepare a ‘scheme of financing’ report to prepare for the next budget. In the previous budget, the tax collection was shown 40% above expected targets. But this time, under the Fiscal Responsibility and Budget Management Act, 2003 (FRBMA), the government has prepared a ‘medium term fiscal policy strategy statement’ to chalk out the department-wise guarantees given and tax-related targets.
“Last session, we had presented a white paper on pending taxes: collection of ₹1,566.53 crore was reported of ₹92,157 crore, and in the non tax collection category, ₹243.42 crore was reported of ₹5,871 crore. Every department has since initiated an Abhay Yojna to collect the pending taxes,” said the report.
Chief Minister Devendra Fadnavis has admitted that the farm loan waiver will burden the State finances for the next two years. Sources close to him said that Mr. Fadnavis was against giving a waiver, but wilted under pressure. “We were warned by the Centre on resulting law and order problems if the waiver was not given,” said a senior official.
The waiver means the State is forced to cut the administrative costs, while cutting down funds for development works. It has already attempted to refinance some of its borrowings by trying to buy back the State Development Loans (SDL). “To raise the SDL with lower interest rates, re-issue option was used. This resulted in low interest rates of 6.82%,” claimed the report.