After two years of surplus, deficit looms over GujaratFebruary 25th, 2008 - 9:07 pm ICT by admin
Gandhinagar, Feb 25 (IANS) The Narendra Modi government Monday announced its decision to mobilise Rs.8.8 billion ($220 million) by levying additional tax in 2008-09, ending a two-year no-tax budget regime since 2006-07. The additional tax will be besides the existing value-added tax (VAT), Finance Minister Vajubhai Vala said. The new tax will, however, leave a deficit of Rs.1.16 billion uncovered, Vala added..
The additional tax, however, will not be imposed on petrol and diesel. Declared and exempted goods also will not attract the additional tax.
Vala, presenting the budget for fiscal 2008-09 beginning April, said the government was compelled to raise additional financial resources to continue with its development agenda.
Not only resources are needed to be raised to fund the state’s 2008-09 annual plan of Rs.190.3 billion, the government also is required to deliver its promise of improving the state’s status on human development index through comprehensive development, including in agriculture, industry and infrastructure sectors, he said.
Outlining his tax proposal, the finance minister said there will an additional tax of one paisa in the rupee on goods that are currently being taxed at the rate of four paisa in the rupee.
Similarly, there will be an addition of 2.5 paise to the rupee in the existing tax rates of other taxable goods.
Summing up the financial situation, Vala estimated the state to end 2007-08 with a surplus of Rs.15.18 billion. But in the fiscal, the state is expected to slide into an estimated overall deficit of Rs.1.16 billion.
Elaborating he said, the deficit at the beginning of the next financial year ending March 31, 2008 is estimated at Rs.8.76 billion at the current rates of taxation.
This will go up to Rs.9.96 billion because of the proposed transfer of profession tax revenues totalling Rs.1.2 billion to local bodies.
Taking into account revenues of Rs.8.8 billion expected through additional tax, the overall deficit is expected to come down to Rs.1.16 billion.
Vala assured the house that the state will make concerted efforts to reduce deficit by slashing non-development expenditure, economy measures in administration, effective tax recoveries and by increasing non-tax revenues.
Vala made no mention of how the revenues that have been lost due to octroi duty abolition last October will be made good.
The state lost Rs.18 billion as octroi revenue in a full year by abolishing it in Ahmedabad, Vadodara, Surat, Rajkot, Bhavnagar, Jamnagar and Junagadh municipal corporations.
On the development front, Vala announced a proposal to create new technological university equivalent to Indian Institute of Technology courses during year in addition to a provision Rs.500 million to establish an Indian Institute of Management-like premier institute in collaboration with Public Health Foundation of India.
More than one programme was announced for tribal area development including a higher provision of Rs.29.33 billion under the Vananabandhu Kalyan Yojana, compared to Rs.23.35 billion in the current fiscal.
Other major provisions in the budget included Rs.32.55 billion for Sardar Sarovar Yojana, Rs.21.11 billion for urban development and housing, Rs.7.75 billion under the Jawaharlal Nehru National Urban Reform Mission, Rs.9.42 billion for agriculture and Rs.8.96 billion for industries and mines.
Vala also announced that farmers living below the poverty line would be given a farmer’s kit each.
Tags: agriculture industry, comprehensive development, development agenda, finance minister, financial situation, gandhinagar, gujarat, human development index, infrastructure sectors, narendra modi, paisa, paise, profession tax, rs 1, rupee, tax budget, tax proposal, tax revenues, vala, year ending march