AP's Q2 revenue receipts short of budget targets

With the second quarter of the current financial year coming to a close, the state finance department's concern over the burgeoning gap between the revenue receipts and the corresponding budgetary targets is already growing.

Though the hike in petrol prices helped the state exchequer to net higher revenue growth, to some extent in the beginning, the department officials have already come to a conclusion that even the initial growth in revenues is not sustainable.

Even as the revenues (both tax and non-tax revenue, including the state's share in central taxes) have slightly increased, as compared to the corresponding period of the previous fiscal, there is already a Rs 1,000-crore gap between the revenue realisation and the budgetary target.

By the middle of September 2004, the state received Rs 10,384 crore towards both tax and non-tax revenue including the state's share in central taxes as against the budgetary target of Rs 11,492 crore.

Department sources said that the envisaged 19 per cent growth in revenue receipts in the annual budget is based more on 'wishful thinking' than any realistic estimates.

Yet, the officials argue that optimism is not a bad thing to cherish while admitting the fact that the current picture was not so encouraging. According to them, the initial growth in revenues, which is around 15 per cent, is also difficult to sustain.

The state government, in its annual budget, had estimated total revenue receipts of Rs 32,181 crore for the current fiscal as against the revised estimates of Rs 27,410 crore receipts for 2003-04. Though there was a considerable jump in revenues during 2003-04 when compared to the previous fiscal, it still fell short of around Rs 2,000 crore of the budgetary estimates.

A similar situation, if not more, is in the offing with excise, motor vehicle tax, stamps and registration, commercial taxes among other revenue earning departments have been falling behind their targets.

According to one school of thought, the increase in fuel prices could be one of the reasons for the lack of buoyancy that was expected in the tax revenue front. Sensing trouble, the finance department has already alerted the chief minister's office over the precarious position of the revenue receipts.

Though there was no immediate cause to press the panic buttons, the situation warrants the government to be more careful in spending, the officials feel.

This also means that announcement of new sops could only aggravate the situation. But the gap in revenue receipts and the budget estimates may lead to either more borrowings or a sizeable cut in plan expenditure.

The governmental expenditure up to the last month during the current financial year was lower by around Rs 1,800 crore as compared to the same period of the last fiscal.

But the expenditure is expected to pick up from October onwards with works under the annual plan, including several irrigation projects, expected to take off during the same period.

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Money matters

• Gap of nearly Rs 1,000-crore witnessed between revenue realisation and budgetary target of Rs 11,492 crore
• The governmental expenditure was lower by around Rs 1,800 crore, up to August of the current financial year