Odisha may continue to sustain revenue losses on account of the Goods and Services Tax (GST) even after five years, while the existing constitutional provision provides for compensating loss to a State’s revenue for a period of five years only, the State government observed in the annual ‘Odisha Economic Survey’ tabled in the Assembly on Monday.
The introduction of GST in July 2017 had resulted in 17 taxes levied by the Centre and States being subsumed under the GST.
“With initial... issues related with the implementation of the new tax regime, Odisha has been facing revenue loss,” the government said in its latest economic survey.
“As per the constitutional provisions, the State will get compensation towards loss of revenue for five years. However, the State may continue to sustain loss on account of GST even after five years because of the structural changes like the rate structure, abolition of central sales tax and entry tax,” the government observed.
As per the economic survey, applying 14% growth rate to the base year’s collection, revenue for 2018-19 is worked out at ₹16,370.08 crore, whereas revenue collection under GST during this period is ₹12,140.45 crore. It implies that compensation claim of the State stands at ₹4,229.64 crore, out of which compensation received so far is ₹3,785 crore. The balance compensation of ₹444.64 crore is yet to be received.
The Odisha Economic Survey projects Gross State Domestic Product to grow by 6.16% in 2019-20, compared with the 7.9% pace posted in 2018-19.
The slowdown in the pace of growth has been attributed to lower agricultural production — with output affected by cyclones — and a deceleration in both mining and manufacturing.
After a dip in growth in 2014-15, as mining and manufacturing decelerated, Odisha’s economic momentum recovered in 2015-16 to 8%. Thereafter, it jumped to 15.6% in 2016-17 due to high production in agriculture, more fiscal consolidation and an increase in manufacturing output.
Growth, however, softened in 2017-18 to 6.3% owing to reduced agricultural production and contraction in manufacturing and mining sector. In 2018-19, the pace ticked up to 7.9% on account of higher agricultural output.
The per capita income of Odisha in 2019-20 is, however, expected to reach ₹1,01,587 up from ₹95,164 in 2018-19. As per advance estimates for 2019-20, the State’s per capita net domestic product at current prices is estimated to grow by 6.75%. During the same period, the per capita net national income is estimated at ₹1,35,050, marking an increase of 6.84% compared with ₹1,26,406 during 2018-19.