Top 18 states to see 8-10% revenue growth
According to a CRISIL Ratings report released on Wednesday, robust Goods and Service Tax (GST) collections and increased devolution from the Centre are expected to propel the revenue of the top 18 states to Rs. 38 lakh crore, growing steadily at 8-10 percent this fiscal year.
These states, which account for over 90 percent of India’s gross state domestic product, grew at 7.5 percent last fiscal.
While revenue from the tax on liquor sales (10 percent of total revenue) will remain stable, mid-single-digit growth in sales tax collections from petroleum products (7-8 percent) and grants recommended by the 15th Finance Commission (10-11 percent) will be modest.
“The biggest impetus to revenue growth will continue to come from aggregate state GST collections that, after growing 18 percent on-year last fiscal, will climb up another 13-14 percent in the current fiscal,” said Anuj Sethi, Senior Director, CRISIL Ratings.
Central tax devolutions, expected to grow 12-13 percent this fiscal, will be the second important driver.
While the proportion of the devolution is determined by the Finance Commission, the overall kitty is linked to gross tax collections by the Centre.
This pool, which expanded by 19 percent on-year last fiscal, should grow at a healthy pace this fiscal as well, supported by rising income tax and GST collections, said the report.
“Revenue from sales tax on petroleum products will grow a modest 3-4 percent on-year this fiscal after a flattish last fiscal. This will stem from higher fuel consumption driven by vehicular and industrial activity, even as the tax structure remains largely unchanged,” said Aditya Jhaver, Director, CRISIL Ratings.
For all the latest updates, download PGurus App.
Other states to stop recruiting Bengalis from Mumtaz Begum state.