KOCHI: Contrary to perception, the state’s revenue grew by a robust 20.77% this year (2021-22 revised estimate) from 8.19% the previous year, but experts reckoned that the state would still have to depend on the Central government transfers to meet the higher payout to the government employees and pensioners following the pay revision.
A close look at the budget papers presented last week showed that the total revenue of the state grew from Rs 97,616.83 crore in 2020-21 to Rs 1,17,888.16 crore in 2021-22. Significantly, the growth is not due to central transfers. While the state’s own revenue registered an increase of 25.31%, the rise in central transfers was only 14.90%. The figures indicate that people have contributed to the exchequer despite the pandemic.
What ensured 20.77% increase in revenue in 2021-22 (revised estimate) over 2020-21 are higher growth in stamps and registration (29.64% from Rs 3,489.59 crore to Rs 4,523.78 crore), sales tax and VAT (29.82% from Rs 17,689.17 crore to Rs 22,962.82 crore) and lottery (43.11% from Rs 4,873.01 crore to Rs 6,974.00 crore).
Jose Sebastian, a public finance expert, said despite the higher revenue, the state government is financially constrained due to the higher outgo following the hike in government employees’ salaries and pensions. Consider this: the share of salary and pension in government expenditure has gone up to 60.43% (Rs 71,235.03 crore) in 2021-22 from 47.81% (Rs 46,671.14 crore) the previous year.
“The pandemic-induced recession had provided a perfect excuse for the government to postpone pay revision. The service organisations would have accepted it, though grudgingly. But the temptation for a second term was too strong to be resisted. In the process, the government has incurred an additional expenditure of Rs 24,563.89 crore to propitiate the government employees and pensioners who form just less than 4% of the state’s population,” said Sebastian.
He said the government employees and pensioners are now clamouring for the release of Rs 12,000 crore in arrears from July 2019, which the government will have to pay sooner or later. The pay was revised with retrospective effect from July 2019.
In 2020-21, the state’s revenue receipts registered a modest increase of 8.19% over 2019-20. In fact, both the state’s own tax revenue (SOTR) and the state’s own non-tax revenue (SONTR) registered a fall in 2020-21 over 2019-20. While SOTR registered a fall of 5.90% from Rs 50,323.14 crore to Rs 47,660.84 crore, the SONTR declined by 40.26% from Rs 12,265.22 crore to Rs 7,327.31 crore. What ensured the modest growth rate in revenue in 2020-21 was due to central transfers and grants which increased by 54.25%, from Rs 27,636.31 crore to Rs 42,628.68 crore.
