The Indian Wire » Business » COVID-19 Lockdown: States stare at major revenue losses worth ₹97K Cr for April
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COVID-19 Lockdown: States stare at major revenue losses worth ₹97K Cr for April

KOLKATA: Leading states, all over India, have reported that they are collectively looking at about ₹97,100 Crore in losses of revenue for the month of April, 2020. Moreover, the administrations from the respective states have blamed the nationwide lockdown that India has been going through from March 25, for these losses. This report has been further backed up by the estimates from an India Ratings report. The report which released on Wednesday summarily states that both Centre and states operations have been severely impacted due to the depletion of reserves that the banning of all “non-essential” activities have caused. But the report also specified that states are in even more of an unstable financial situation as they are compelled to make inroads into the enhancement of public healthcare infrastructure which incurs significant expenditures.

The lockdown and its successive extensions, aimed at curbing the spread of coronavirus, have harshly disrupted manufacturing, supply-chains and most trade related operations. Meanwhile the restriction on movement placed during lockdown have led to such massive losses in the aviation, hospitality and tourism industries that even an immediate lifting of lockdown can’t help kickstart our economy till the next quarter, at best.

These lockdown-related losses have been more devastating for few states which are more self-reliant in terms of earnings than others. States like Goa, Gujarat, Haryana, Karnataka, Kerala, Maharashtra, Tamil Nadu and Telangana have stood out as they bring in about 65 to 76% of their revenue, independent of external sources.

Among these states, Gujrat has the highest rating for self-reliance with 76% of their revenue, generated internally, followed by Telengana with 75.6%, Haryana at 74.7%, Karnataka at 71.4%, Tamil Nadu at 70.4%, Maharashtra with 69.8%, Kerala 69.6% and Goa at 66.9% of revenue, from state-side sources. Thus, Gujrat has been hit the hardest among the 21 states which reported a revenue loss.

These states had estimated their GST revenue for the month of April at a total of ₹26,962 Crore. Meanwhile they had estimated ₹11,397 Crore worth of stamp & registration duties, auto tax was predicted at ₹6,055 Crore. The collective VAT revenue estimation was at ₹17,895 Crore while excise duty budget stood at ₹13,785 Crore. Other estimations included their collective tax & duties on electricity at ₹3,464 Crore and their own non-tax revenue at ₹17,595 Crore.

State usually accumulate their revenues from these aforementioned sources. But, with around a 40% of the economy, still operational, under lockdown, states did generate some revenue under the head of SGST, state VAT, tax and duty on electricity and own non-tax revenue.

However, in light of the current crisis, experts say that states remain uncertain about the quantum and timings on centre’s announced relief efforts and other receivables. They reasoned that the dwindling sources of revenue for the central government is making them seek out new and more ways of generating revenue while pushing out measures, austere in nature. With states, all over India, facing a massive loss in revenues, these measures, announced by RBI and Government, are sure to make state administrations breathe easy but only for the time being and nothing more.

State Administrations are really hoping that centre will open up the economy in phases, after May 17. For instance, a week ago states opened up liquor sales with a number of states having raised the excise duty on them. Meanwhile, other states have raised VAT on petrol and diesel to help bridge the revenue flow.

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