India Ratings and Research has estimated that Tamil Nadu could have suffered a revenue loss of ₹8,412 crore for the month of April alone, due to the COVID-19 lockdown.
The firm had analysed the loss to State's own Revenue for 21 major states and has estimated a collective revenue loss of ₹97,100 crore for April 2020.
For Tamil Nadu, State Own Revenue accounts for 70.4% of its total revenue.
States own revenue mainly comes from seven heads – state goods and services tax (SGST), state VAT (mainly petroleum products), state excise (mainly liquor), stamps and registration fees, tax on vehicle, tax and duty on electricity and own non-tax revenue.
India Ratings said it has analysed the revised estimate of states budgets for FY20 of all the major states to calculate the likely revenue loss to the major states in India.
"Here, it is important to point out that despite the lockdown, nearly 40% of the economy was functional, as economic activities defined as ‘essentials’ were allowed to remain operational," it said. This means that despite the lockdown some amount of revenue did accrue to the state government under the head of SGST (40%), state VAT (30%), tax and duty on electricity (10%) and own non-tax revenue (10%). Even after making these adjustments, states are faced with a significant revenue loss in April 2020, it added.
For Tamil Nadu, India Ratings estimated loss of ₹2211 crore under SGST ₹2827 crore under VAT₹605 crore under state excise ₹1094 crore under stamp and registration fees.
The state is estimated to have lost ₹ 502 crore on vehicle tax and ₹108 crore from duty on electricity and ₹1065 crore as own non-tax revenue, it said.
Tamil Nadu has raised ₹ 12,000 crore so far in this financial year through sale of bonds, to offset the hit in revenue collections and meet the increased expenditure.
The state has also increased excise duty on liquor and VAT on petroleum products.
Although the lockdown is going to adversely impact the revenue performance of all the states, those with a high share of own revenue in the total revenue would be the worst impacted. In this regard, the states that stand out are Goa, Gujarat, Haryana, Tamil Nadu, Telangana, Karnataka, Maharashtra and Kerala as 65%-76% of their revenue comes from their own sources, India Ratings said.
