States Vat losses in 2006-07 may exceed Budget estimate

New Delhi, May 17 | Updated: May 18 2006, 05:30am hrs
The compensation claims from states for Vat-induced revenue losses in 2006-07 might exceed the budgeted amount of Rs 3,000 crore. Maharashtra has already sought a compensation of Rs 1,115 crore, in addition to Rs 260 crore the state had availed of in the last fiscal.

Although the pending claims also pertain to the last fiscal, the centre will have to provide for it from the curreny fiscals allocation, official sources said.

This apart, the five BJP-ruled states, which adopted Vat from April 1 2006, would be demanding 100% comepnsation this fiscal for any decline in revenue growth from the historical growth rate. Trends show that industrialised states like Maharashtra and Gujarat are likely to post less-than-hostorical growth rate in the initial years of Vat. Gujarats claims are expected this fiscal.

In 2005-06, the Centre had released a total of Rs 2471 crore to states to compensate them for Vat-induced revenue losses. Karanataka received teh highest amount (Rs 1038 crore), followed by Kerala (Rs 456 crore), Andhra Pradesh (Rs 404 crore), Maharashtra (Rs 260 crore) Bihar (166 crore) and West bengal (Rs 139 crore).