Haryana, which had received praises for financial planning and management by none other than the Planning Commission seems to have fallen in the net of the ongoing slowdown as its revenue receipts are likely to come down by about Rs 2,500 crore in 2008-09 while expenditure may go up by almost the same amount thanks to implementation of recommendations of the sixth Pay Commission.
To implement the recommendations of the sixth Pay Commission, the state government requires additional Rs 1,500 crore. Similarly creation of new posts, appointment of large work force and promotions in different cadres will mean an additional expenditure of Rs 1,000 crore.
Ironically when Haryana needs an additional Rs 2,500 crore, the revenue receipts are likely to fall by the same amount. For instance, the decline in collections of value added tax will be at least Rs 1,000 crore and stamp duty charges on registration of real estate will come down by over Rs 1,000 crore in view of slump in the property prices. Decline in sales of vehicles, less sale of cement and steel may also affect revenue receipts.
Highly placed sources in the government told FE on Sunday that chief minister of Haryana, Bhupinder Singh Hooda has called a meeting of senior officials on Monday from different departments to chalk out a strategy to face the slowdown, which has started affecting the economy of Haryana too. Only recently, the excise and taxation minister, Birender Singh had called a meeting of officials to find out ways to jack up collections in this difficult situation.
Enquiries reveal that VAT growth in October and November had fallen to less than 15% as against about 21% growth witnessed by the state during the first six months of 2008-09. In the first six months of 2008-09, Haryana collected VAT of Rs 4,300 crore up 21 % from the previous year.
The direct tax collection is also likely to be affected because of slowdown. Significantly, Haryana had proved to be a money spinner for the Centre as it had made maximum direct tax collection of Rs 5,215 crore in 2007-08 as against combine collection of Rs 4,528 crore by Punjab, Himachal Pradesh, Jammu and Kashmir and Chandigarh. The state had shown a growth of 65% in direct tax collections in 2007-08 as against 18% growth shown by Punjab, Jammu and Kashmir, Himachal and Chandigarh. For record, the national growth was 38%. The growth in Haryana?s direct tax collection has been mainly due to increase in corporate tax collection by 87% at Rs 2,532 crore.
Haryana excise and taxation minister told FE ?Haryana government is working on a innovative incentive scheme for the recovery of arrears from tax defaulters under which 5% of the total recovered money from defaulters will be given to the informer? He said that he had also reviewed tax collection by the excise and taxation department and called a meeting of the deputy excise and taxation commissioners
The cause of worry for the state government could be the fact that Haryana had earmarked a tax collection target of Rs 11,840 crore during the current financial year. However, out of this, only Rs 6,139 crore had so far been collected which was just 51.86% of the targeted total tax collection.