The state government is expected to get additional revenue of about Rs 2,000 crore per annum if the recommendations of the expert committee on revenue enhancement headed by Sanjib Chandra Hota are accepted in toto.
"It is difficult to make an exact assessment at the moment on the additional revenue that will be generated if the recommendations of the Hota committee are accepted. However, it is felt that the Gross State Domestic Product (GSDP) of Orissa will grow by one per cent and the state can collect additional revenue of about Rs 2,000 crore per year if the recommendations are approved in toto. As per advanced estimates, the GSDP of the state is projected at Rs 214,309 crore by the end of 2011-12,” finance minister Prafulla Chandra Ghadai said in response to a query in the state assembly.
"The copy of the report has been sent by the finance secretary to all departmental secretaries. The concerned departments have been asked to examine the recommendations and asked to prepare Action Plans for implementation of these recommendations. The state Chief Secretary will convene a meeting very soon and then the report of the committee will be laid before the Chief Minister. To accept the recommendations of the panel, we need to go for administrative restructuring and also make some legal changes if needed. We expect to implement the committee's recommendations in two years,” he added.
Justifying the need to form the panel, the minister said, “The state government will lose Rs 1,500-2,000 crore after the refinery project of Indian Oil Corporation Ltd (IOCL) at Paradeep becomes operational. The state also needs to enhance its tax-GSDP ratio to seven per cent which currently stands at six per cent. All this requires additional revenue generation and hence the committee was constituted to diversify the state's revenue base.”
The Hota committee had projected that the cumulative impact on collection of Value Added Tax (VAT) from petroleum products after commissioning of the IOCL refinery at Paradeep during 2013-24 may be of the order of Rs 50,195.89 crore. The committee will observe that this will create a big dent in the state's resources, especially because the massive expansion of the capacity of IOCL could also displace other retailers of petro goods who pay taxes.
The recommendations made by the Hota committee include hiking the base rate of VAT from four per cent to five per cent, creation of a separate wing for professional tax administration and fixation of higher rate for industrial water during drought years.
In the mining sector, the panel had suggested that at least Rs 1,000 per hectare per annum be fixed as the surface rent for land not accessible to land revenue with respect to major minerals. Moreover, it has also stated that in the future, all mines of important minerals should be recommended and leased out only in favour of Orissa Mining Corporation (OMC).