The Comptroller and Auditor General (CAG) has come down heavily on the Uttar Pradesh government for higher cost of tax collection when compared to the national average.
The cost of collection of major revenue receipts had been higher in subsequent financial years during 2008-11 vis-à-vis the all India average. The CAG has recommended the state needed to take appropriate measures to bring down this expenditure. The CAG report was placed in the UP assembly on Wednesday.
The gross collections in respect of trade tax/VAT receipts during 2008-09, 2009-10 and 2010-11 stood at Rs 17,482 crore, Rs 20,825 crore and Rs 24,836 crore respectively, on which respective cost of collection incurred was Rs 272 crore, Rs 358 crore and Rs 406 crore.
This puts the percentage of cost of gross collection in UP during these years at 1.56, 1.72 and 1.64 in UP against the national average of 0.83, 0.88 and 0.96 per cent respectively.
It further noted there had been increasing trend in generation of state’s own revenues during 2006-11 period. Tax revenue-Gross State Domestic Product (GSDP) ratio remained constant around 7 per cent and non-tax revenue-GSDP ratio substantially decreased from 2.77 per cent in 2009-10 to 1.90 per cent in 2010-11.
UP GSDP stood at about Rs 588,000 crore (current prices) during 2010-11.
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The debt-GSDP ratio at 38 per cent at the end of 2010-11 was on lower side, especially in view of the target of Fiscal Responsibility and Budget Management (second amendment) Act 2011 to contain it to 42 per cent by the end of 2014-15.
CAG noted that nearly 92 per cent of borrowed funds in UP were used for discharging debt liabilities during 2008-11. The state was maintaining a sinking fund, but it may not be sufficient for amortisation of loans.
The fiscal position of UP had shown improvement in 2010-11. Although revenue surplus reduced by Rs 3,539 crore, the fiscal deficit had reduced to 2.93 per cent of GSDP during 2010-11 due to low capital expenditure over the previous year.