Prof Mithilesh Kumar Sinha
Finance Officer NU, Lumami
Revenue Receipts
The total revenue receipts (TRR) include the State’s own tax and non-tax revenues, Grants in Aid and a share in the Central taxes from the Government of India. The State’s share in Central taxes devolves as per the recommendations of the Central Finance Commission. Studying the trends in revenue receipts for the period from 2004-05 to 2014-15 in Table 1, we see that the State’s own revenues as a share of total revenue have remained almost stagnant and flat. It was 8.24 per cent in 2004-05 that witnessed a slight increase to 8.62 per cent in 2014-15. This indicates a perceptible stagnant in the State’s ability to raise resources internally. The major component of State’s own revenues is tax revenue, where the share has increased marginally. In a period of 11 years from 2004-05 to 2014-15 it witnessed an increase less than 1.00 per cent that is from 4.24 per cent in 2004-05 to 5.08 per cent in 2014-15.
Further, within its own revenues, the share of non-tax revenue has declined from 4.24 per cent in 2004-05 to 3.54 per cent in 2014-15. Non-Tax Revenue includes profit and dividend on government equity, and charges collected for rendering government services like road transport, water sewage, irrigation charges, urban cess, etc. A stagnant trend in State’s own tax revenues and declining trend in non-tax revenues indicates a drying up of taxes or a narrowing tax base, a contraction of charged Government services or a non-recovery of the economic cost of services. This is indicative of systemic weaknesses and a suboptimal resource mobilization within the State.
Further, the above Table reveals that the share of Central grants in total receipts which was 90.50 per cent in 2004-05 has decreased to 84.80 per cent in 2014-15, indicating the State’s reliance upon Central grants-in-aid and devolutions during the eleven year period. Also the share of central allocations in revenue receipts has grown from 9.50 per cent in 2004-05 to 15.20 per cent in 2014-15. .
This shows much dependency on the Government of India for resources and also shows the lack of tax buoyancy within the State’s own tax revenue streams and needs to be addressed.
Analysing the trends in the State’s own tax revenue as a percentage of GSDP in Table 2, we see that this share has increase marginally and almost stagnant and flat though the total revenue receipts as a share of GSDP have increased.
When the economy is weak Government is put under increasing pressure to increase the revenue of the State. State’s own tax and non-tax revenues need to be managed properly and accelerate the State’s revenue receipts.
