The State governments have been taking various initiatives ranging from increasing property tax and power tariffs to announcing new liquor policies and privatising state public sector enterprises to improve their own source of resource mobilisation, the Economic Survey said.

Citing RBI’s report on municipal finances, the Survey said India’s property tax collection was much lower than the OECD countries and there is a wide disparity in taxes across the States with a scope for a large-scale reform of property taxation practices in India. 

The Survey said Tamil Nadu, Telangana and Kerala have revised the property taxes during the year to support their revenues while Tamil Nadu, Andhra Pradesh, Telangana, Karnataka, Madhya Pradesh, Haryana, Kerala, Assam and Puducherry have considered revising their power tariffs during FY23.

States which are able to generate more revenue on their own are less dependent on the devolution and Central grants

The Survey also pointed out that Uttar Pradesh has announced a new liquor policy increasing the licence fee, renewal fee, processing fee and registration fee across various categories of liquor/ distilleries.

“In addition, many States have also made efforts towards privatising SPSEs (state public sector enterprises) and monetising assets in FY21 & FY22 to receive additional incentives from the Union Government,” it added. 

These reforms, the Survey said, will lead to unlocking the money trapped in unproductive assets and freeing it up for productive use.

The Survey also highlighted other revenue generating measures adopted by the States such as Assam’s liquidation scheme for payment of arrears, Haryana’s one-time scheme for settlement of old VAT dues, and Assam and Kerala’s Green tax to discourage old vehicles.

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