Telangana weary as revenues stagnate

Telangana may have done exceptionally well in collection of own revenues over the GSDP, but what has now become a matter of serious concern is that the state, has reached a saturation point.

Published: 12th August 2018 10:34 AM  |   Last Updated: 12th August 2018 10:34 AM   |  A+A-

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HYDERABAD: Telangana may have done exceptionally well in collection of own revenues over the Gross State Domestic Product (GSDP), but what has now become a matter of serious concern to the powers-that-be is that the state, which came into being just four years ago, has reached a saturation point in revenue collection. This means that the state government cannot launch new schemes that need huge finances.

Sources in the finance department told The Sunday Standard that notwithstanding its stellar performance in revenue collection, the fact that the collections have reached a saturation point has become a major cause of worry to the government.  “Achieving nine per cent revenue collection over GSDP is a big achievement. But Telangana has reached a saturation point in revenue collection,” officials said, adding that further growth in revenues would not be much.

“If the economic growth is high, tax collections will increase. But, we cannot expect the state’s economy to grow at 15-20 per cent constantly every year in future. The scope for further increase in revenue is very less. At the most, we can increase revenue collection by another 0.5-1 per cent, which means there is a possibility of getting an additional revenue of `4,000 crore to `8,000 crore every year, but not more,” sources explained.

Another option is to raise the tax rates. Imposing additional tax burden will not only spoil the reputation of the government but also prompt the public to try evade tax, which will dent actual revenues, officials said.
If there is no further growth in revenues, will the state face major problems? “If revenues do not increase, the state cannot launch new schemes involving huge financial commitments. More than 50 per cent of state’s revenue goes for payment of salaries and pensions. Any further abnormal increase of salaries is practically not possible. “The 43 per cent fitment given last time is itself a real burden,” the officials explained.

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