The State government is banking on a slew of measures, both proposed and some already under implementation, to bring about revenue buoyancy, fiscal prudence and drastically reduce the revenue deficit in the next couple of years.
The government has estimated that the next financial year (2022-23) will have about 17% growth in the State’s Own Tax Revenue (SOTR), which accounts for about 60% of its revenue receipts. But, it has projected a 25% growth in the SOTR during 2023-24, which will also be a poll-eve year in light of the Lok Sabha election, due for April-May 2024.
As a result, the revenue through SOTR, which is expected to be ₹1,42,799.93 crore during 2022-23, has been estimated to rise to ₹ 1,78,499.91 crore in 2023-24.
In other words, SOTR collections will see a jump of about ₹35,700 crore, one of the likely consequences of which is the fall in revenue deficit. The government has calculated that the revenue deficit, which will be ₹52,781.17 crore for the next year, will decrease by nearly half in 2023-24.
A perusal of the pattern of SOTR collections for the last 15 years reveals that only twice, the year-on-year growth rate of SOTR crossed the 25% mark and, on seven occasions, exceeded the double-digits. If revenue collections materialise during 2023-24 as planned, this will be after a gap of over 10 years that the State will have about 25% growth in SOTR.
Asked whether the SOTR growth rate and drastic fall in revenue deficit are realistic, a senior official of the Finance Department describes the targets as “ambitious” but “doable.” The government is undertaking “many systemic reforms” to ensure higher resource mobilisation. “Such efforts will bear fruit,” the official says.
In regards to revenue deficit, the official points out that in the pre-COVID-19 pandemic years, the deficit was in the range that has been indicated for 2023-24. According to the White Paper, released by the State government in August 2021, the figure of revenue deficit for 2017-18 and 2018-19 were ₹21,594 crore and ₹23,459 crore respectively.
As the government is expecting 2023-24 to be a normal year, it will not have to shell out money, as it did in 2020-21 or 2021-22, in the form of cash support and relief kits to the pandemic-hit people and “heavy” Pongal gift hampers. If there are no such expenses, the government can save approximately ₹13,000 crore that year, the official adds.
