State govt’s revenue in FY24-25 is ₹20,000 crore lower than estimated

Mumbai: The revenue accumulated by the Maharashtra government at the end of the financial year 2024-25 is at least ₹20,000 crore lower than the budget estimates announced last month.

Revenue generation from almost all the major sectors, including GST, excise, stamp duty, and vehicle tax, has taken a beating. This has added to the problems of the cash-strapped state government, which is struggling to manage its expenditures after launching several populist schemes ahead of the assembly elections last year.

The shortfall is almost 6% of the targeted revenue of ₹5,36,463 crore as per the revised estimates announced on March 10, when state finance minister Ajit Pawar presented the budget.

According to the state finance department’s figures, Maharashtra’s GST collection is ₹1,62,655 crore, as against the estimated collection of ₹1,67,905 crore; VAT collection is ₹58,317 crore, compared with the budget estimate of ₹67,375 crore; and professional tax collection is ₹2,899 crore, as against the estimated collection of ₹3,773 crore. Overall, the expected revenue from GST, VAT and professional tax collection was estimated to be ₹2,39,053 crore, but the government has managed to get just ₹2,21,756 crore.

“These are the collection figures taken on March 31, and we expect a rise of about ₹3,000 crore by April 7, when the revenue figures are finalised,” said an official from the GST commissionerate.

Similarly, excise duty collection fell short of its target of ₹30,500 crore by over ₹5,000 crore, as it could collect only ₹25,424 crore. Despite the buoyancy in the market, stamp duty collection could not meet its target of ₹60,000 crore and ended up mopping ₹58,040 crore. The transport department was given a vehicle tax collection target of ₹14,875 crore, but fell short by nearly ₹200 crore.

Acknowledging the shortfall, minister of state for finance Ashish Jaiswal said, “The shortfall in the revenue receipt is also because of the unprecedented situation arising due to the election year, as both the revenue generation as well as expenditure were impacted. Even if the revenue deficit increases, we are trying to increase the receipts in FY 2025-26 to compensate for the shortfall in FY2024-25.”

Jaiswal expressed confidence that the government will increase its revenue and can handle the expenditure. “We are getting ₹3,000 crore from the amnesty scheme announced for unrealised tax revenue and are tapping more sources to increase the revenue from other sources. Even if the revenue and fiscal deficit increases, we have always kept it within the limit of 3% of GSDP as mandated under the Budget Responsibility and Financial Management (BRFM) Act,” he said.

However, experts and officials from the revenue-generating departments said that the state government also unreasonably inflates the figures of expected revenue generation to keep the revenue and fiscal deficit low.

A Mantralaya official dealing with the situation said, “The revised estimates (RE), in the wake of the burden due to the populist schemes like Ladki Bahin Yojana, were unreasonably hiked by the government for FY2024-25 [to show that funds would be available for the schemes]. Naturally, the revenue generation increased by 8-10% year-on-year, but the target for some departments was more than 30%. For instance, against the collection of ₹23,322 from excise in FY 2023-24, it was estimated to be ₹30,500, which was 31% higher.”

The official added, “One can understand about the budget estimates (BE) given a year ago, but the RE cannot be so unreasonable as they are given just three weeks ahead of the end of the financial year. The RE figures for revenue were upped by ₹37,001 crore from BE (from ₹5.99 lakh crore to ₹6.36 lakh crore), and the difference was over 6%.”

Another Mantralaya official said the non-tax revenue and central grants, too, are unlikely to meet their target, which could lead to the widening of the deficit. This could also mean the government’s spending on various heads will be affected, the official added.

Lower-than-estimated revenue results in a rise in the revenue deficit. The revenue deficit as per RE for FY2024-25 was ₹26,535 crore against the BE of ₹20,050 crore. The lower the estimated income, the higher the revenue deficit will be by at least ₹20,000 crore.

“This has been the trend of inflating figures for the last few years,” said another official from the state finance department. “The actual revenue receipts in FY 2022-23 was ₹4,05,678 crore when the RE for the year was ₹4,30,925 crore and BE was ₹4,03,427 crore. In FY23-24, the actual revenue collection was ₹4,30,596 crore against RE of ₹4,86,116 crore and BE of ₹4,49,523 crore.”

The budget estimate is the figure mentioned in the budget. The revised estimate is mentioned towards the end of the year, while actual figures are mentioned after the actual revenue or expenditure figures are available.

Rupesh Keer of NGO Samarthan, which studies the state budget, said that the reduction in revenue results in a reduction in the spending on development work. “It also means that the fiscal deficit was more than shown in the budget and its percentage to GSDP was more and close to the cap of 3% as per BRFM Act. The revenue deficit is obviously carried forward to the next financial year,” he added.